Pacific Capital Backs Out of Loews Plan

Loews Cineplex Entertainment Corp., the largest publicly traded U.S. movie theater operator, said investment bank Pacific Capital Group Inc. won’t help buy it as part of a bankruptcy reorganization.

The withdrawal comes less than two weeks after a committee of unsecured creditors for New York-based Loews Cineplex first said it planned to file a competing plan.

Loews Cineplex disclosed Pacific Capital’s withdrawal in a Tuesday filing with the Securities and Exchange Commission. It had agreed when it filed for protection from creditors Feb. 15 to be bought out by Canadian conglomerate Onex Corp. and by Pacific Capital and Oaktree Capital Management, another investment firm.

The buyout group plans to convert $250 million of Loews Cineplex’s bank debt into an 88% equity stake, with the remaining 12% going to unsecured creditors.

Pacific Capital, founded in 1985, is run by Gary Winnick, who also is chairman of Bermuda-based fiber-optic network provider Global Crossing Ltd.

A Loews Cineplex spokeswoman said she did not believe Pacific Capital’s withdrawal would affect the buyout’s structure because Onex is the lead investor group, but she declined to say when a definitive agreement may be signed.

At the end of February, Loews Cineplex operated more than 2,500 movie screens in nearly 300 locations. Its principal stockholders are Sony Pictures Entertainment, the movie-making arm of Sony Corp., and Universal Studios Inc., the movie-making unit of Vivendi Universal.