Carmike Cinemas executives have promised to be more aggressive in acquiring other movie-theater companies. Today, they did just that.
The motion-picture exhibitor, headquartered in downtown Columbus, said it is plunking down $19 million in cash for 16 movie complexes (251 screens) in seven states from Rave Reviews Cinemas LLC.
The deal, expected to close before the end of this year, also has Carmike assuming about $100 million in lease and financial obligations related to the Rave Reviews theaters.
Carmike President and Chief Executive Officer David Passman, in a statement, pointed out the acquisition fits the firms strategy of growing to 300 theaters and 3,000 screens. As of June, it had 233 theaters, with 2,245 screens, in 35 states.
Importantly, seven of these theaters are leaders in their respective markets and another four are the number two box office generators in their region, Passman said. The average age of the properties we are acquiring is only eight years, so we expect limited maintenance capital expenditure requirements on the facilities over the near term.
Rave Reviews Cinemas is owned by Dallas-based BV Investment Partners, with the theater companys roots dating to Rave Motion Pictures 1999 founding by businessman Tom Stephenson.
The movie houses feature all-stadium seating and are outfitted with digital technology, with 40 percent of the screens equipped for 3-D viewing. Seven of them have large-format IMAX screens, which is somewhat comparable to the Carmike BigD format it has been rolling out in its new and existing complexes.
Six of the theaters being bought are in Alabama, including three in Birmingham, with four in Florida (two in Pensacola), two in Indiana, and one apiece in Illinois, Pennsylvania, Tennessee and Texas.
From a financial cash-flow standpoint, Carmike said the acquired complexes will add about $23.6 million in earnings before interest, taxes, depreciation and amortization (EBITDA).
Carmike expects to retain existing Rave employees at the new theaters, Passman said.
Passman in recent quarters has repeatedly referred to Carmikes transition from a fix it to grow it mode, meaning the company is largely done with pumping money into upgrading existing theaters that were showing their age.
Last year, Carmike gobbled up a small Atlanta-area movie theater company, MNM, which had three theaters and 40 screens. Earlier this year, it bought a seven-screen complex from Destinta Theatres in Clarion, Pa.
It also has been adding new properties or planning to do so, including in the markets of El Paso, Texas; Cleveland, Tenn.; Sandestin, Fla.; Jacksonville, N.C.; Winchester, Va.; and Decatur, Ala. It typically is partnering with developers who construct the movie complexes, then lease them for long terms to Carmike, which has decided to stop owning property wherever possible as a way to save money.
The company, which reports its third-quarter earnings data on Nov. 5, is trending toward the high point of its stocks 52-week trading range of $5.18 to $15.80 per share. Carmikes stock surged out of the gate today in trading on the Nasdaq exchange, rising more than a dollar per share early, then holding on to much of that. The stock closed up 80 cents, or 7 percent, at $12.08 per share.
Here are the theaters being purchased by Carmike Cinemas:
Lee Branch 15, Birmingham, Ala.
Patton Creek 15, Birmingham, Ala.*
Vestavia Hills 10, Birmingham, Ala.
Jubilee Square 12, Daphne, Ala.
Valley Bend 18, Huntsville, Ala.*
Wharf 15, Orange Beach, Ala.
Avenue 16, Melbourne, Fla.
Bayou 15, Pensacola, Fla.*
Pensacola 18, Pensacola, Fla.
Port St. Lucie 14, Port St. Lucie, Fla.
Jefferson Point 18, Fort Wayne, Ind.*
Metropolis 18, Indianapolis, Ind.
Grand Prairie 18, Peoria, Ill.*
Promenade 16, Allentown, Pa.*
East Ridge 18, Chattanooga, Tenn.*
Yorktown 15, Houston, Texas
* Includes IMAX auditorium