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EXHIBIT 99
FOR IMMEDIATE RELEASE
August 1, 2000
Contact: Martin A. Durant
Chief Financial Officer
Carmike Cinemas, Inc.
(706) 576-3416
Suzanne D. Brown
Investor/Public Relations
(706) 576-2737
Carmike Cinemas Announces that Senior Lenders
Block Interest Payment
Carmike Cinemas, Inc. (NYSE:CKE) announced today that the agent under
each of the Company's bank credit facilities has delivered Payment Blockage
Notices to the Company and the indenture trustee of the Company's 9-3/8% Senior
Subordinated Notes due 2009 (the "Notes"), prohibiting the payment by Carmike of
the semi-annual interest payment of approximately $9 million due to the holders
of the Notes on August 1, 2000. The notices, which could prohibit Carmike from
making any payments on the Notes for a period of up to 179 days, were delivered
as a result of the Company's technical noncompliance with formula-based
financial covenants which require that certain specified ratios be maintained.
These covenants are included in each of the Company's $200 million Amended and
Restated Credit Agreement dated as of January 29, 1999 (as amended, the
"Revolving Credit Agreement") and the Company's Term Loan Credit Agreement dated
February 25, 1999 (as amended, the "Term Loan Agreement" and, with the Revolving
Credit Agreement, the "Bank Facilities") and a $75 million master lease facility
(collectively, the "Credit Facilities"). On July 25, 2000, the agent under the
Bank Facilities delivered a notice of default to the Company that declares an
event of default under the Bank Facilities based upon the technical
noncompliance with financial covenants and expressly reserves the lenders'
respective rights and remedies under the Bank Facilities. The notice of default
is not an acceleration of the maturity of the Company's debt obligations under
the Bank Facilities. The Company is current in all its payment obligations under
the Credit Facilities.
The Company has been engaged in active discussions with its lenders
regarding obtaining a waiver of the covenant noncompliance and restructuring of
the Credit Facilities. However, no assurances can be given that any such waiver
will be received or that the financial covenants will be renegotiated on terms
that will allow the Company to achieve current and future compliance and allow
the payment of semiannual interest to noteholders. Martin A. Durant, Carmike's
Chief
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Financial Officer, stated that "based on what we believe are conservative
assumptions, Carmike should be able to continue to generate positive cash flow
and meet all of its current debt obligations during the next 12 to 24 months. We
are not currently experiencing liquidity problems, and we are hopeful that our
bank lenders will work with us to establish reasonable covenants that are more
consistent with the economic downturn in our industry and the Company's expected
financial performance." In that context, he noted that the Company has been and
is taking actions to ensure its ongoing ability to cover scheduled debt service,
including the elimination of new movie theatre development, curtailment of
renovation and expansion of existing theatres and theatre acquisitions,
increased management control over expenditures, aggressive marketing of surplus
assets, and evaluations of alternative capital sources, as well as pursuing debt
restructuring with the current lenders. Mr. Durant pointed out that, as a result
of the covenant noncompliance, all debt outstanding under the Company's Bank
Facilities as of June 30, 2000 that is potentially due beyond one year has been
reclassified from long-term debt to current debt on the Company's financial
statements.
Michael W. Patrick, Carmike's President and CEO, said, "We are very
disappointed with our lenders' decision to issue a payment blockage notice with
regard to our Notes." He noted that the competitive dynamics in the marketplace
which led to unprecedented theatre development of megaplexes during the latter
half of the 1990s have left exhibitors with highly leveraged balance sheets.
"This highly leveraged environment, which reflects increasingly costly theatre
improvements such as stadium seating, digital surround sound and other
state-of-the-art features, leaves all of us in the industry particularly
vulnerable to adverse conditions which negatively impact working capital and
makes compliance with financial formula covenants under bank credit agreements
difficult. For example, during the last three weeks in June we saw a sharp
downturn in box office receipts as a result of unexpectedly weak and
disappointing film performance as compared to the prior year," he noted. Mr.
Patrick also stated that, "While we are continuing to actively negotiate with
the bank lenders, the Company is considering all of the options available to
it."
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