Orion's recap plan to dilute share value.Orion's recap re·cap 1 tr.v. re·capped, re·cap·ping, re·caps 1. To replace a cap or caplike covering on: recapped the bottle. 2. plan to dilute share value Orion Pictures Corp. stock traded last week in the $2.75-a-share range, but under a recapitalization Recapitalization Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. plan hatched by the ailing movie-maker's management, the shares should be worth about 25 cents, said Sally Overstreet, senior vice president in the research department of Jeffries & Co., the Los Angeles-based brokerage. Hollywood's smallest studio, Orion finances, makes and distributes movies worldwide and produces television programming. Savaged by production and overhead costs overhead costs see fixed costs. , Orion posted a $63 million loss on revenues of $584.2 million in the fiscal year ended Feb. 28. For the quarter ended May 31, Orion reported a loss of $24.8 million on revenues of $172.1 million, explained Overstreet. From 1988 to 1991, Orion's cost per film soared to $16.1 million from $9.5 million, and box office revenue per film needed to break even rose to $40.3 million from $23.8 million, estimates a report by the Delaware Bay Delaware Bay: see Delaware, river. Delaware Bay Inlet of the Atlantic Ocean. Forming part of the New Jersey-Delaware state border, it extends southeast for 52 mi (84 km) from the junction of the Delaware River with Alloway Creek to its entrance Co., a New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of brokerage. In a move to avert bankruptcy - it can't honor IOUs to bondholders, banks and other creditors - Orion on Aug. 15 announced a plan for majority shareholder John Kluge John Werner Kluge (born September 21, 1914) is an entrepreneur who was born in Chemnitz, Germany, best known as a television industry mogul in the United States. He earned his B.A. degree in Economics from Columbia University in 1937. of Virginia, the billionaire, to inject another $50 million in cash into the company, and for bondholders to exchange Orion IOUs for a 70 percent stake in the recapitalized Orion, said Overstreet. Kluge's stake would be cut to 29 percent from 68 percent. Shareholders other than Kluge (jargon) kluge - /klooj/, /kluhj/ (From German "klug" /kloog/ - clever and Scottish "kludge") 1. A Rube Goldberg (or Heath Robinson) device, whether in hardware or software. - who now own 30 percent of Orion - would see their stake snipped back to a mere 1 percent. "Kluge is going to pay $50 million for 29 percent of Orion," said Overstreet. "That works out that the whole company is worth $170 million. Existing shareholders would get 1 percent of that, worth $1.7 million. There are 7.5 million shares held by shareholders other than Kluge. If you divide $1.7 million by 7.5 million, you get about 25 cents." Thus current Orion shareholders may wish to reconsider their holdings, advised Overstreet. |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion