Shareholders of Regal Entertainment Group
Perhaps emboldened by the California Public Employees' Retirement System's dogged pursuit of Walt Disney
Denver billionaire and Qwest
While I'm certainly supportive of enhancing shareholder value through periodic tax-advantaged dividends, extraordinary payments representing the distribution of more cash than a firm earns in a year leave me skeptical that management couldn't find better ways to deploy that money other than decapitalizing the company. The $710 million special dividend payment nearly quadruples Regal's entire net income last year of $185 million.
Other companies such as Value Line
Regal was formed several years ago from the merger of three bankrupt chains: Regal Cinemas, United Artists Theatres, and Edwards Theatres. The combined firm operates more than 6,000 movie screens, or nearly one in five domestic screens, and has a presence in 46 of the top 50 markets. The company seems to be doing just fine on its own, without the payment of two extraordinary dividends that will weaken the balance sheet and overtax the company's otherwise-healthy cash flow.
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Fool contributor Nathan Slaughter visited a Regal Cinema yesterday, though he owns none of the shares mentioned.