Ronald O. Perelman is handing over Panavision Inc., the debt-laden camera rental company that is suffering from a steep downturn in movie and TV production, to its creditors.
Perelman's holding company, MacAndrews & Forbes Holdings Inc., has reached an agreement in principle with a group of creditors -- including Cerberus Capital Management, the former owner of Chrysler -- for the billionaire investor to give up his controlling stake in the camera maker that has been a fixture on movie sets for decades, according to people familiar with the matter.
The financial restructuring would cut Panavision's debt by $140 million and give it an additional $40 million in new financing. After the deal, Perelman would no longer have any equity in the company.
“This will ultimately benefit Panavision by reducing its debt load and providing fresh capital for growth," said a person close to the situation who requested anonymity.
Perelman, best known for his controlling stake in cosmetics giant Revlon Inc., took control of the company in 1998 in a complex deal that saddled Panavision with nearly $500 million in debt.
Like prop houses and other companies in the Hollywood supply chain, Panavision has been hammered by the sharp drop in production that began during the 2008 Hollywood writers strike and the subsequent standoff between the major studios and the Screen Actors Guild. Then just as Hollywood began to regroup after the strike, the recession hit, leading studios to make fewer movies and advertisers to cut back on making commercials, slackening demand for filmmaking equipment.
People close to Panavision say camera and lens orders for feature films, which account for most of the company's revenue, fell about 15% last year. The company's annual revenue for the fiscal year that ended June 30, 2009, was about $260 million, according to Moody's. The privately held company does not disclose its finances, but one person with knowledge of the company's finances said it still generated an operating profit.
Panavision, which employs 1,200 people, including 300 in Woodland Hills, manufactures cameras, lenses and accessories, but it doesn't sell them. Instead, the company leases them to studios as well as film and TV production companies through a network of distributors.
Although Panavision remains the market leader, it faces mounting competition from upstart rivals such as Red Digital Cinema, a company that makes low-cost digital cameras. The pressure to improve results has led to a series of management shake-ups.
Perelman's holding company, MacAndrews & Forbes Holdings Inc., has reached an agreement in principle with a group of creditors -- including Cerberus Capital Management, the former owner of Chrysler -- for the billionaire investor to give up his controlling stake in the camera maker that has been a fixture on movie sets for decades, according to people familiar with the matter.
The financial restructuring would cut Panavision's debt by $140 million and give it an additional $40 million in new financing. After the deal, Perelman would no longer have any equity in the company.
“This will ultimately benefit Panavision by reducing its debt load and providing fresh capital for growth," said a person close to the situation who requested anonymity.
Perelman, best known for his controlling stake in cosmetics giant Revlon Inc., took control of the company in 1998 in a complex deal that saddled Panavision with nearly $500 million in debt.
Like prop houses and other companies in the Hollywood supply chain, Panavision has been hammered by the sharp drop in production that began during the 2008 Hollywood writers strike and the subsequent standoff between the major studios and the Screen Actors Guild. Then just as Hollywood began to regroup after the strike, the recession hit, leading studios to make fewer movies and advertisers to cut back on making commercials, slackening demand for filmmaking equipment.
People close to Panavision say camera and lens orders for feature films, which account for most of the company's revenue, fell about 15% last year. The company's annual revenue for the fiscal year that ended June 30, 2009, was about $260 million, according to Moody's. The privately held company does not disclose its finances, but one person with knowledge of the company's finances said it still generated an operating profit.
Panavision, which employs 1,200 people, including 300 in Woodland Hills, manufactures cameras, lenses and accessories, but it doesn't sell them. Instead, the company leases them to studios as well as film and TV production companies through a network of distributors.
Although Panavision remains the market leader, it faces mounting competition from upstart rivals such as Red Digital Cinema, a company that makes low-cost digital cameras. The pressure to improve results has led to a series of management shake-ups.
