NEW WOMETCO TO SELL SELL ITS THEATERS
Miami Herald, The (FL) - March 12, 1984
Author: LARRY BIRGER Herald Business/Monday Editor
When Miami-based Wometco Enterprises Inc. is acquired this spring, provided a last-minute glitch develops, one of the first moves of the new owners will be the sale of the company's 45 movie theaters.
Most probably, they'll also sell two of Wometco's best-known attractions -- the Miami Seaquarium and Citrus Tower in Claremont, in Central Florida.
Also on the block will be Wometco's vending division, which was built from scratch into one of the 10-largest machine-fed food-service operations in the United States.
Plans to sell these assets were disclosed in a voluminous proxy statement prepared for Wometco's proposed sale -- the largest leveraged buyout in the United States -- to the New York banking firm of Kohlberg, Kravis, Roberts & Co.In a leveraged buyout, the purchaser -- in this case borrows most of the money and uses the cash flow from the company's operations to pay off the debt over an extended period.
Wometco shareholders will vote March 29 on the proposed buyout at $46.50 a share. Also being sold to KKR is the 15 per cent of Wometco Cable TV Inc. that is held publicly. For that, stockholders will receive $29.50 a share.
If shareholders approve, and the Federal Communications
Commission also agrees to the transfer of Wometco's six television station licenses, the deal could be consummated as early as next month and cost KKR slightly more than $1 billion.
The buyout would mark an end to the empire that began in 1925 with Mitchell Wolfson and Sidney Meyers, both now dead, who opened their first movie theater on North Miami Avenue between Third and Fourth streets.
From that tiny start grew a leisure-time empire that 58 years later, in 1983, grossed $520 million and enjoyed after-tax profts of $30.8 million -- both all-time, one-year records.
KKR and its limited partners are financing their heir
purchase by borrowing $660 million -- including $500 million
from a group of banks headed by Continental Illinois of Chicago. Another major lender is Teachers Insurance and Annuity Association of America, which is putting up $27 million.
Van Myers and Arthur Hertz, who will stay on as chief executive and administrative officers, say sale of the amusement and vending units -- and also extensive real estate in Miami and Alaska -- was dictated by the need to raise cash to reduce the huge debt accumulated in the buyout.
"In the formula of a leveraged buyout, you have to convert into cash those assets that don't produce sufficient return to justify the debt," Hertz says.What will be left of Wometco will be split into two companies. Broadcasting will be headed by Anthony J. Cassera, president and chief executive officer of Golden West Television, owned by another KKR company.
Myers and Hertz will head up non-broadcasting, which will include the company's 47 cable TV systems in 163 communities and the soft-drink operations. Wometco is one of the nation's largest Coca-Cola bottlers with operations in areas that serve 12 million people.
But Myers is quick to point out the company will not be in a hurry to dispose of its expendable assets.
"This is no fire sale," he says, "We're not in a rush to sell. There will be no bargains. We'll only sell when we find buyers who are willing to pay a fair price."
The divisions up for sale, however, have not been among the company's star performers -- which is another reason to dispose of them. Wometco closed five theaters during 1983, and the division lost money in 1981-82 before earning a modest profit last year.
Seaquarium attendance dipped from 950,000 in 1980 to 525,000 in 1983, with the decline attributed to a general drop in tourism in South Florida.
Vending sales of $102.6 million in 1983 were slightly ahead of 1982, but income declined to $3.8 million from $4.5 million a year earlier.
Analysts who follow the company say what Wometco's new owners are doing is typical in a leveraged buyout.
"It's a very usual technique that you streamline operations by selling off extraneous, less productive assets and also real estate that is generally carried on the books at cost but could bring a big profit when sold," says Ed Tavlin, of Miami's Prescott Ball & Turben Inc.
Robert Beck, a partner in State Street Research and Management Co. of Boston, whose mutual funds hold a large position in Wometco, agrees.
"Vending is traditionally a very cyclical business that requires lots of capital. And motion pictures aren't the greatest growth business. I'd also think the company has very valuable real estate under the theaters. So it's an intelligent way for them to reduce the leverage and not sell off the better assets."
Beck also says KKR, an outsider with no emotional ties, will have an easier time selling off company holdings than the Wolfson family. "It's very difficult for the family to take an objective view. It's tough for them to sell."
Except for two of its members, the family will be out of the picture once the sale is completed.
Mitchell Wolfson Jr., son of the founder, who will be paid $84.5 million for his holdings, will remain as one of Wometco's seven directors. He is investing $7 million of his own money to become a limited partner.
Louis Wolfson III, a grandson who is a vice president in Wometco Cable and whose holdings of more than 1 million shares are worth nearly $50 million, is buying a small equity position
from KKR.
Together, 31 company employes will wind up with 5.9 per cent of the non-broadcasting side and 4 per cent of the broadcasting side. But they'll have to pay $5 for each share they acquire.
They were given the ownership option in the restructured companies, each of which will have 15 million shares of privately held stock.
Hertz, 50, who will receive more than $2.2 million for the Wometco shares he holds, will emerge as the largest shareholder among current managers by paying $1 million for 200,000 shares in the two new companies.
Myers, 66, who will get nearly $1.4 million for his Wometco stock, will pay $200,000 for 40,000 shares.
KKR, meanwhile, will receive $10 million for negotiating the purchase agreement and will receive annual fees that start at $600,000 and increase at a compound rate of 10 per cent yearly for managing the surviving companies.
Drexel, Burnham Lambert Inc., a New York investment banker hired to render an opinion as to whether the $46.50 price was fair to the stockholders, is being paid $4 million.
Merrill Lynch Capital Markets, which also rendered a favorable opinion, is getting $200,000. And Continental Illinois will receive $1.2 million for bringing Wometco to the attention of KKR.
Not all shareholders are pleased with the price. Several class actions suits have been filed with one litigant claiming the price is "grossly inadequate and unfair." Another maintains that Wometco's board had earlier turned down more than $50 a share.
Analyst Tavlin calls the $46.50 "a full price" since Wometco is selling for 28 times 1983 earnings. "But its earnings are growing rapidly," he maintains.
Adds State Street's Beck: "I think it's a fair price, and it could be underpriced. Wometco has some very valuable assets."
SUNRISE: A GLORY THAT WAS by Mary Jo Tierney
SUNRISE: A GLORY THAT WAS
Miami Herald, The (FL) - September 25, 1983
Author: MARY JO TIERNEY Herald Staff Writer
The message on the marquee at the Sunrise movie theater is something no one wanted to see.
It says "Closed for Refurbishing," but there's not much action inside the 60-year-old downtown movie house.
"We're not quite sure what we're going to do with it. We have to have our architects take a look at it and analyze the situation," said Tommy Hyde, vice president of Kent Theaters, which has rented the building from the Koblegard family for more than 20 years.
Not many people got sentimental when the old Fort Pierce Hotel was torn down last month. But the Sunrise movie theater -- now that's something else.
It's where St. Lucie County Judge E.P. DeFriest first saw Tom Mix on his white horse. "I remember it like it was yesterday. It was the most exciting thing that ever happened to me. The most disappointing thing that happened to me was not having a dime and having to miss one of those serials on Saturday afternoon," he said.
The theater is where A.E. (Beanie) Backus started his artistic career. Backus made the posters of the upcoming attractions. He was paid $14 a week, but also got to see some of the "big shots" who came to the Sunrise. And he said there were some big shots.
Sally Rand was there, doing her fan dance, and Olson and Johnson's Hellzapoppin rolled them in the aisles. There was vaudeville and the Saturday morning Mickey Mouse clubs, followed by a double feature.
But the biggest attraction was Wednesday night. That was bank night. "A drum majorette would pick a number out of a bowl and the winner would get a couple hundred dollars, or some dishes or furniture. The place was packed. Everyone in town would be there," said Circuit Court Judge Philip Nourse.
Nourse was an usher, making $3 a week "working every night of the week and on weekends." But he said the the job did have its fringe benefits. "All the pretty girls were there on Saturday afternoon."
For decades,the Sunrise theater was a favorite rendezvous spot for teenagers. It was big and dark enough for some discreet smooching, just as long as they stayed out of the balcony.
The balcony was reserved for the blacks, who until the late 1950s, were not permitted to sit in the main theater.
The Sunrise was once the biggest theater between Jacksonville and Miami. For decades it was the only theater in Fort Pierce. Now there's the Village in Searstown with its six theaters and the Cinema on South U.S 1 with its two screens. But most serious moviegoers said the Sunrise is still the best place in town to watch a film.
The screen is mammoth compared to the others and the theater is big enough to have a smoking section.
But the Sunrise has a lot of overhead and no longer draws enough of a crowd to fill all of those seats.
"The public just doesn't realize what's involved in running a theater like that," Hyde said.
He said Kent theaters could give up their lease to the Koblegards, but no decision has been made.
R.N. (Koby) Koblegard, whose father and grandfather both ran the Sunrise, said he isn't sure what the family would do if Kent decided to pull out.
"I guess we could put something else in there or renovate it. Or maybe we could tear it down and start all over ... It's just not a moneymaker anymore," he said.
Nourse said he may have the answer. "Tell them to have the bank nights again," he said. "They were always the talk of the town."
Miami Herald, The (FL) - September 25, 1983
Author: MARY JO TIERNEY Herald Staff Writer
The message on the marquee at the Sunrise movie theater is something no one wanted to see.
It says "Closed for Refurbishing," but there's not much action inside the 60-year-old downtown movie house.
"We're not quite sure what we're going to do with it. We have to have our architects take a look at it and analyze the situation," said Tommy Hyde, vice president of Kent Theaters, which has rented the building from the Koblegard family for more than 20 years.
Not many people got sentimental when the old Fort Pierce Hotel was torn down last month. But the Sunrise movie theater -- now that's something else.
It's where St. Lucie County Judge E.P. DeFriest first saw Tom Mix on his white horse. "I remember it like it was yesterday. It was the most exciting thing that ever happened to me. The most disappointing thing that happened to me was not having a dime and having to miss one of those serials on Saturday afternoon," he said.
The theater is where A.E. (Beanie) Backus started his artistic career. Backus made the posters of the upcoming attractions. He was paid $14 a week, but also got to see some of the "big shots" who came to the Sunrise. And he said there were some big shots.
Sally Rand was there, doing her fan dance, and Olson and Johnson's Hellzapoppin rolled them in the aisles. There was vaudeville and the Saturday morning Mickey Mouse clubs, followed by a double feature.
But the biggest attraction was Wednesday night. That was bank night. "A drum majorette would pick a number out of a bowl and the winner would get a couple hundred dollars, or some dishes or furniture. The place was packed. Everyone in town would be there," said Circuit Court Judge Philip Nourse.
Nourse was an usher, making $3 a week "working every night of the week and on weekends." But he said the the job did have its fringe benefits. "All the pretty girls were there on Saturday afternoon."
For decades,the Sunrise theater was a favorite rendezvous spot for teenagers. It was big and dark enough for some discreet smooching, just as long as they stayed out of the balcony.
The balcony was reserved for the blacks, who until the late 1950s, were not permitted to sit in the main theater.
The Sunrise was once the biggest theater between Jacksonville and Miami. For decades it was the only theater in Fort Pierce. Now there's the Village in Searstown with its six theaters and the Cinema on South U.S 1 with its two screens. But most serious moviegoers said the Sunrise is still the best place in town to watch a film.
The screen is mammoth compared to the others and the theater is big enough to have a smoking section.
But the Sunrise has a lot of overhead and no longer draws enough of a crowd to fill all of those seats.
"The public just doesn't realize what's involved in running a theater like that," Hyde said.
He said Kent theaters could give up their lease to the Koblegards, but no decision has been made.
R.N. (Koby) Koblegard, whose father and grandfather both ran the Sunrise, said he isn't sure what the family would do if Kent decided to pull out.
"I guess we could put something else in there or renovate it. Or maybe we could tear it down and start all over ... It's just not a moneymaker anymore," he said.
Nourse said he may have the answer. "Tell them to have the bank nights again," he said. "They were always the talk of the town."
LOST IN SPACE: 'JEDI' IS STOLEN FROM THEATER
LOST IN SPACE: 'JEDI' IS STOLEN FROM THEATER
Miami Herald, The (FL) - May 25, 1983
Author: UNITED PRESS INTERNATIONAL
Sheriff's deputies were searching Tuesday for a print of the film Return of the Jedi that was stolen from a movie theater .
Kjel Nore, manager of the Bush River Cinemas, said the movie completing the Star Wars trilogy was delivered early in the morning, but it was gone by the time he got to work.
Return of the Jedi makes its world premiere today in more than 800 theaters in the United States and Canada. The movie is expected to gross more than $20 million in its first week, 20th Century-Fox officials said.
Sheriff's Capt. Jack Bowden said the movie print is worth about $3,000, but "it's not the value of that particular print we're worried about. It's the potential lost income. They're worried about somebody copying the film and distributing it. That could run into millions."
Another copy of the film was quickly shipped to the theater for its 11 a.m. premiere.
Miami Herald, The (FL) - May 25, 1983
Author: UNITED PRESS INTERNATIONAL
Sheriff's deputies were searching Tuesday for a print of the film Return of the Jedi that was stolen from a movie theater .
Kjel Nore, manager of the Bush River Cinemas, said the movie completing the Star Wars trilogy was delivered early in the morning, but it was gone by the time he got to work.
Return of the Jedi makes its world premiere today in more than 800 theaters in the United States and Canada. The movie is expected to gross more than $20 million in its first week, 20th Century-Fox officials said.
Sheriff's Capt. Jack Bowden said the movie print is worth about $3,000, but "it's not the value of that particular print we're worried about. It's the potential lost income. They're worried about somebody copying the film and distributing it. That could run into millions."
Another copy of the film was quickly shipped to the theater for its 11 a.m. premiere.
POLICY ON ALIEN FILMS CHALLENGED
POLICY ON ALIEN FILMS CHALLENGED
Miami Herald, The (FL) - March 10, 1983
Author: From Herald Wire Services
A civil liberties group challenged the Reagan Administration in court Wednesday over its decision to brand three Canadian films as propaganda that must carry special labels when shown in the United States.
In legal papers filed in U.S. District Court, the American Civil Liberties Union said the action violates constitutional free speech guarantees and stigmatizes the films, two about acid rain and an anti-nuclear movie nominated for an Academy Award.
Meanwhile, Rep. Robert W. Kastenmeier (D., Wis.), chairman of the House judiciary subcommittee on civil rights, introduced a bill to repeal the section of the Foreign Agents Registration Act of 1938 requiring that films and other similar material carry the disclaimer.
Kastenmeier said his bill would repeal the section of the law calling for Justice Department review of films and other materials.
"I view such actions as unwarranted government intrusion into activities in an area clearly protected by the First Amendment," the congressman said.
At issue is the Justice Department's decision that the three films -- produced by the National Film Board of Canada, an independent agency of the Canadian government -- are subject to the Foreign Agents Registration Act.
Under that law, the department can review materials intended for distribution in this country by registered agents of foreign powers.
If the material meets a definition of "political propaganda," it must carry a label that it is edited by the registered party and that "registration does not indicate approval of the contents of this material by the U.S. government."
The film board also must tell the government the number of groups seeing the film and the names of the television stations, organizations or theaters using the material.
The ACLU said the government's "attempts to cause a denigrating label to be placed or retained on the films, and the requirements that the Canadian film board assist in the execution of any notice of dissemination in connection with the films violate the First Amendment."
It also said the films fall under a fine arts exemption of the law.
The ACLU asked the court to declare the "political propaganda" regulations are unconstitutional and to block the government from requiring the films to carry the special label.
The government's action has caused a storm of protest and condemnation from members of Congress. It also prompted long lines at movie theaters showing the films: If You Love This Planet, Acid From Heaven, and Acid Rain: Requiem or Recovery?.
The Justice Department had no comment on the ACLU's suit. However, in letters to editors last week, department spokesman Thomas DeCair said the administration is not engaging in censorship and called the reaction "uninformed hysteria."
The ACLU filed its suit on behalf of two environmental groups, a Washington movie theater which has shown the documentaries, a film distributor, the New York Library Association and the state of New York, which argued its citizens have a right to learn about the acid rain problem that affects their environment.
Miami Herald, The (FL) - March 10, 1983
Author: From Herald Wire Services
A civil liberties group challenged the Reagan Administration in court Wednesday over its decision to brand three Canadian films as propaganda that must carry special labels when shown in the United States.
In legal papers filed in U.S. District Court, the American Civil Liberties Union said the action violates constitutional free speech guarantees and stigmatizes the films, two about acid rain and an anti-nuclear movie nominated for an Academy Award.
Meanwhile, Rep. Robert W. Kastenmeier (D., Wis.), chairman of the House judiciary subcommittee on civil rights, introduced a bill to repeal the section of the Foreign Agents Registration Act of 1938 requiring that films and other similar material carry the disclaimer.
Kastenmeier said his bill would repeal the section of the law calling for Justice Department review of films and other materials.
"I view such actions as unwarranted government intrusion into activities in an area clearly protected by the First Amendment," the congressman said.
At issue is the Justice Department's decision that the three films -- produced by the National Film Board of Canada, an independent agency of the Canadian government -- are subject to the Foreign Agents Registration Act.
Under that law, the department can review materials intended for distribution in this country by registered agents of foreign powers.
If the material meets a definition of "political propaganda," it must carry a label that it is edited by the registered party and that "registration does not indicate approval of the contents of this material by the U.S. government."
The film board also must tell the government the number of groups seeing the film and the names of the television stations, organizations or theaters using the material.
The ACLU said the government's "attempts to cause a denigrating label to be placed or retained on the films, and the requirements that the Canadian film board assist in the execution of any notice of dissemination in connection with the films violate the First Amendment."
It also said the films fall under a fine arts exemption of the law.
The ACLU asked the court to declare the "political propaganda" regulations are unconstitutional and to block the government from requiring the films to carry the special label.
The government's action has caused a storm of protest and condemnation from members of Congress. It also prompted long lines at movie theaters showing the films: If You Love This Planet, Acid From Heaven, and Acid Rain: Requiem or Recovery?.
The Justice Department had no comment on the ACLU's suit. However, in letters to editors last week, department spokesman Thomas DeCair said the administration is not engaging in censorship and called the reaction "uninformed hysteria."
The ACLU filed its suit on behalf of two environmental groups, a Washington movie theater which has shown the documentaries, a film distributor, the New York Library Association and the state of New York, which argued its citizens have a right to learn about the acid rain problem that affects their environment.
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