Regal sees National Amusements as tough sell

By Jui Chakravorty Das and Sue Zeidler

NEW YORK (Reuters) - Regal Entertainment Group (RGC.N) would look at the assets of rival movie theater chain National Amusements Inc if Sumner Redstone put them up for sale, but tight credit markets could make it a tough sell, Regal's chief executive said on Wednesday.

Analysts and media reports have said that Redstone, who is chairman of National Amusements, may consider selling its 1,500-screen cinema chain to raise money to meet debt obligations.

"Certainly, their domestic assets are complementary and contiguous to markets that we already operate in, so from a geographic standpoint I think there's certainly a fit there," Regal CEO Mike Campbell told the Reuters Media Summit.

While Regal, the largest U.S. cinema chain with more than 6,700 screens, looks at every asset that goes up for sale, Campbell noted that limited access to credit in current markets would make any acquisition difficult, even though company valuations are attractively low.

"The same lending markets that may be creating the opportunities creates a barrier for potential acquirers, whether it's National Amusements or anybody else out there today," Campbell said.

"There would have to be some affordable financing in the market out there and that just isn't happening today," he said.

Redstone this week sold his stake in video game company Midway Games Inc MWY.N as pressure mounts on the media mogul to bolster the finances of National Amusements, his main investment vehicle. National Amusements also owns stakes in media companies Viacom Inc (VIAb.N) and CBS Corp (CBS.N).

Analysts have valued the National Amusements movie chain at about $500 million to $700 million. But for a company seeking to refinance $800 million in bank loans that are due in December, possible buyers will likely low-ball their offers, considering the process a fire sale.

Some media reports have also said that Redstone considers the value of the chain to be about $1 billion, including the property on which the theaters are built.

Asked about National Amusements on a November 10 conference call, another competitor, Cinemark Holdings Inc (CNK.N), said it has the ability and would consider takeovers based on price and the quality of theaters that become available.

"There potentially are acquisition opportunities out there, and we'll just have to weed through those as the time -- as they present themselves," Cinemark Chief Executive Alan Stock Stock said on the call.

Campbell said Regal would have to access the credit markets for a deal of National Amusements' size. Even if a company did have the cash, it might be prudent to hold on to it amid the weak economy and uncertain markets, he said.

While downtrodden stock prices do make assets attractive, frozen credit markets would likely hamper industry consolidation.

"I can't imagine there would be a bidding war. The bigger challenge would be finding buyers, period," Campbell said.

Regal last spring acquired Consolidated Theaters, a Charlotte, North Carolina-based regional chain that operates 28 theaters with 400 screens for about $210 million. Regal had outstanding debt of $2 billion at the end of the third quarter.