990843 Planet Hollywood Files for BankruptcyAugust 19, 1999Miami - Star-spiced global hamburger chain Planet Hollywood International said it would seek U.S. bankruptcy court shelter in a financial make-over involving cash injections from a Singapore billionaire and a Saudi prince. Much imitated in using celebrities to pull in diners, Orlando, Fla.-based Planet said in a news release it had secured $30 million for working capital and was bargaining with lenders ahead of a Chapter 11 bankruptcy court filing on the terms of a settlement. A Chapter 11 filing would allow Planet Hollywood, with diminished pressure from lenders, to keep operating its flashy restaurants filled with costumes, publicity stills and props from old movies. It would also permit it to void leases on favorable terms at those venues not making money. "The company has been enduring significant press about whether or not we would be around," Robert Earl, founder and chief executive of Planet Hollywood, said in an interview. "I see this as a complete restructuring." Operator of nearly 80 movie-themed Planet Hollywood restaurants, as well as other eateries, the company was founded in 1991 and grew quickly -- too quickly and with too much debt, according to critics. Its investors and promoters included Bruce Willis, Sylvester Stallone, Arnold Schwarzenegger and Whoopi Goldberg. Imitators with other glitzy, ultimately failed theme restaurants included supermodels, director Stephen Spielberg and magician David Copperfield. Planet Hollywood last week reported the latest in a string of money-losing quarters and has been in default on debt payments since April. Sales at restaurants open a year or more were off 22% in the 13 weeks through June 27. Earl said in the interview the prepackaged restructuring plan would wipe out $250 million of bond debt in exchange for $47.5 million in cash, a 26.5% equity stake in the company and other securities. An investment group, including current shareholders Prince Alwaleed Bin Talal and Singapore billionaire Ong Beng Seng, will inject $30 million in working capital for a 70% stake, the company said. A trust benefiting Earl's children was also in the group. "It looks like the bondholders would receive a package of value which was pretty much in line with expectations," said Stephen Schoene, an analyst of junk and distressed bonds at broker-dealer Miller Tabak in New York. Earl said investors owning most of Planet Hollywood's bonds were meeting Tuesday about the plan, which would wipe out all current equity. He said a decision by the bondholders, whose approval was needed, could come at any time. If the plan flies, a bankruptcy filing would come later this year, he said. Shares of Planet Hollywood, which had traded at more than $30 in 1996, closed unchanged at 75 cents in U.S. trading. But prices on Planet Hollywood's high-yield bonds were up 50% after the restructuring news to roughly 30 cents on the dollar from 20 cents in recent weeks, Schoene said.
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