Investors may have forgotten about IMAX
The Regal deal will mean as many as 21 of its screens will be part of a profit-sharing deal with IMAX by the summer of 2009. In other words, initial results have been encouraging enough at Regal for it to continue to expand its relationship with IMAX.
The news comes just two weeks after IMAX announced a 10-screen deal with China's largest movie exhibitor.
The difference between the two deals is that the Chinese pact will extend IMAX's reach in the world's most populous nation with more than 30% involved paid installations. With Regal, IMAX is going the joint venture route that will find both companies bankrolling the installation and sharing in the eventual profits.
Which approach is better? I'm a fan of the joint venture path. It creates a greater stream of recurring revenue when IMAX continues to team up with studios like Time Warner
The problem? Well, IMAX isn't exactly loaded with greenbacks itself. IMAX had $18.5 million in cash in its pockets at the end of June, but that is dwarfed by the $160 million in debt that the company must repay -- or replace -- in three years.
The ugly balance sheet -- one that actually sports negative book value -- is one of the reasons the company tried to find a buyer last year. It didn't pan out, and that's a pity because IMAX could sorely use a parent with deep pockets to push the potentially lucrative joint venture deals.
The timing is right. Trying to cash in after 2006's robust summer cinematic season, Cinemark
IMAX is in the right place at the right time. It's just holding the wrong wallet.
Screen these other IMAX feature presentations:
IMAX has been recommended to Motley Fool Rule Breakers newsletter service subscribers. No, it hasn't panned out that well, but the average pick is still beating the market. Time Warner is a Stock Advisor selection. Toy around with either newsletter with a free, 30-day trial.
Longtime Fool contributor Rick Munarriz is a movie buff, but he does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has an all-singing, all-talking, all-dancing disclosure policy.