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| Planet Hollywood s'agenouille! |
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Mardi le 17 août, 1999
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Theme-restaurant chain Planet Hollywood
International Inc., partially owned by film stars such as Sylvester Stallone,
plans to file voluntarily for Chapter 11 bankruptcy protection while it
attempts to restructure its operations.
As part of the planned reorganization, the company's two largest
shareholders and a trust for the children of the company's CEO have
agreed to provide a $30 million cash infusion to help keep the international
chain of glitzy restaurants going.
``We are confident we are taking the necessary steps to revitalize our
Planet Hollywood operations,'' CEO Robert Earl said.
In a separate interview, Earl said the planned reorganization was
necessary for Planet Hollywood to get out from beneath the burden of the
$250 million in debt it is carrying.
Earl said the company plans to sell off its businesses in order to focus on
the core Planet Hollywood concept. Though Earl declined to get into
specifics, Planet Hollywood has been trying to sell its nine All-Star Cafes.
The bankruptcy filing is the latest chapter in what has been a tumultuous
few months for the operator of nearly 80 movie-themed Planet Hollywood
restaurants. Former president William Baumhauer resigned in June, just
three months after the company's co-founder resigned his board position.
Keith Barish left the company in March, resigning as a board member
after selling nearly half of his stock. Barish started the venture in 1991 with
Earl and actors Stallone, Demi Moore, Arnold Schwarzenegger and
Bruce Willis.
The company has been trying to cut operating costs by reducing corporate
overhead, putting in cost-control systems, streamlining store-level
operations and disposing of nonessential corporate assets.
Despite those moves, analysts have said aggressive expansion and
increased competition have hurt the company.
Earl acknowledged this, saying some restaurants would shut down.
In April, the Orlando-based company failed to make a $15 million interest
payment on $250 million in bond debt.
Last week, it reported a second-quarter loss of $28.2 million, or 26 cents
a share, compared to a loss of $1.24 million in the year-ago period.
Revenue in the three months ended June 27 fell to $76.6 million from
$105.1 million a year ago.
The number of customers drawn to the trendy restaurants have declined
and merchandise sales -- which account for about one-third of the
company's revenue -- have dropped 31 percent.
Under the planned restructuring, to be filed by the end of the year, holders
of $160 million of the debt will exchange it for $47.5 million in cash and
$60 million in new bond debt. Those creditors would also receive a 26.5
percent stake in the restructured company.
The $30 million investment being made by Saudi Prince Alwaleed Bin
Talal, wealthy Singapore businessman Ong Beng Seng and a trust in which
the sole beneficiaries are Earl's children.
In exchange for the cash infusion, the investors' group will receive a 70
percent stake in the company, with the remaining shares available to other
creditors.
All of the film stars who are currently involved with Planet Hollywood will
remain on board, Earl said.
Shares of Planet Hollywood, which have been trading in limited volume on
the New York Stock Exchange, finished unchanged at 75 cents. |
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