Planet Hollydoomed Rick Aristotle Munarriz (TMF Edible)
August 17, 1999
In the Steven Spielberg classic E.T., a plush-friendly alien eventually goes home to save his ailing planet. That, of course, was science fiction. For Planet Hollywood (NYSE: PHL) there is a collective refrain this morning:
Yesterday afternoon the celluloid-intensive restaurant chain filed for Chapter 11 bankruptcy protection. It may not have come as a surprise to those who attended the annual meeting back in May only to find that the company had been in default of its debt payments since April.
The company is likely to take advantage of the process to rid itself of unattractive leases and ditch unwanted concepts. Who knows, maybe Planet Hollywood will pick up on some of the sage advice doled out by savvy Fools during our Save The Planet Contest?
Through ever-widening deficits and double-digit same-store sales declines, the Planet's days were numbered. When Chief Operating Officer Bill Baumhauer resigned this summer -- toiling away for less than a year in his restructuring efforts -- those numbers tanked like a box office bomb.
Another tell-tale sign may have occurred earlier in the year when, just as the company was swelling with turnaround optimism, co-founder Keith Barish was cashing in and moving out. Movie mogul Barish is no stranger to tweaking audience perception. Like shareholder Arnold Schwarzenegger's climactic conclusion in Terminator 2 -- where his character gives the thumbs up as he sinks into his molten demise -- all was apparently not as cheery as advertised. Barish may have been the shrewd visionary, except for the fact that he could have bailed three years earlier at prices ten times higher.
Barish left CEO and fellow co-founder Robert Earl behind. Earl, and a few of the company's largest shareholders, are set on pitching in $30 million for 70% of the newly restructured company. Bondholders met yesterday to discuss a proposal that would replace the $250 million they are owed with $47.5 million in cash, $60 million in new secured notes and a 26.5% stake in the company. What about the current shareholders?
"All the clouds are being removed today subject to bondholders' approval," Earl said yesterday.
Maybe it's just me, but I think I can make out some shareholders in those clouds.