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ORLANDO-About 300,000 sf of locally leased retail space is at risk in a pending Chapter 11 filing by Knoxville, TN-based Regal Cinemas Inc., the nation’s largest theater chain, movie industry sources and area brokers speculate to GlobeSt.com.

Regal operates 103 screens at eight Central Florida locations in Orange, Osceola, Lake and Volusia counties and is the largest operator in the four-county metropolitan area.

The Tennessee firm plans to continue operating the locations, according to its previously published statements.

But metro Orlando brokers and movie house representatives have a gut feeling more shuttered theater space may be coming on line in first quarter 2002. Regal officials couldn’t be reached for comment on the local brokers’ speculation.

“We have all heard that Regal plans to be doing business as usual here next year but we are entering a different economic climate and closing half of those locations may turn out to be a plus for that company’s reorganization plans,” an Orlando retail broker in a position to know tells GlobeSt.com on condition of anonymity.

Based on its 10-Q filing with the Securities and Exchange Commission, Regal lost $121.7 million on income of $579.4 million in the first half. The second-quarter loss was $44 million on revenue of $292.3 million.

Regal had operated 4,361 screens at 396 locations. As of this month, after more closings, that total was down to 3,898 screens at 338 locations in 32 states.

Denver billionaire Philip F. Anschutz and Los Angeles-based Oaktree Capital Management reportedly own about $750 million of Regal’s $1 billion debt. That makes the two groups Regal’s largest creditors.

Anschutz is a majority owner in United Arts Theater Corp. and Anschutz Corp. United filed for Chapter 11 protection in September 2000.

The proposed reorganization plan would allow the Denver investor and his associates to trade the Regal debt they have bought for an equity position in the theater company, brokers intimate with the pending bankruptcy petition filing tell GlobeSt.com.

Leveraged buyout firms Kohlberg Kravis Roberts & Co. of New York and Dallas-based Hicks, Muse, Tate & Furst Inc. bought Regal in 1998 for $1 billion. Anschutz has fought the buyout firms over the past 12 months for control of Regal.

If the Bankruptcy Court approves the sale of Regal to the Anschutz group in exchange for its debt holdings, KKR and Hicks, Muse would be freed of the $1 billion debt load but would receive nothing from the transaction, brokers and movie industry sources following the pending bankruptcy filing tell GlobeSt.com.

The Anschutz group would then own 6,000 screens or about 20% of the theater industry, sources tell GlobeSt.com. The group already owns Edwards Theatres Circuit Inc. of Newport Beach, CA.

Edwards is currently winding its way through Chapter 11 reorganization after filing in August 2000. The chain owns 70 theaters with 739 screens.

Edwards lost $40 million in 1999 after earning $14 million in 1998, according to its filings with the Securities and Exchange Commission.

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