$40-Mil Buyout Looms for Silver Cinemas

A fund of Los Angeles-based Oaktree Capital Management LLC is in the process of reviewing the profit margins of the chain's theaters to see which will go and which will stay, with an eye on a mid-to late May closing. Silver Cinemas has sold some unprofitable theaters since filing its Chapter 11 about a year ago. The Silver Cinemas' existing portfolio consists of 72 theaters, representing 321 screens, in 16 states while its specialty operation, Landmark Theatres has 51 locations, with 166 screens, in 11 states. Landmark is the nation's largest arts and specialty film exhibitor.

Oaktree is a long-time creditor of Silver Cinemas, Tom Andrus, theater chain CFO, tells GlobeSt.com. The final number of theaters that will be bought has not been determined, but Andrus says he expects "they'll be purchasing a substantial number, if not all of them." Under-performers most likely will be shuttered. The holdings include the popular Inwood Theatre in Dallas. "The Inwood is a profitable theater," Andrus says, "so it's not one we would expect them to reject." The chain's 1,300 employees are expected to be kept in place by the new owner, if the deal goes to a final signing.

Silver Cinemas is based at 4004 Beltline Rd. Andrus is part of a new management team that had come on board to steer the Chapter 11. All of the founding management has left the company. "Obviously things can happen, but at this point in time it looks like a go," Andrus says of the buyout. That most likely, he says, will spell the chain's dissolution, the hiring of a new executive team and the relocation of corporate offices to Los Angeles. Oaktree also has secured the right to use the Silver Cinema and Landmark names as part of the deal, according to Andrus.

Oaktree has about $18 billion under management. Its clients primarily are pension plans, foundations and other institutional investors.