De Laurentiis Gives Up on Investors’ Bond Swap Plan

Debt-laden De Laurentiis Entertainment Group threw in the towel Thursday on its crucial effort to get its investors to trade in their old bonds for new ones. An officer later declined to say whether the Beverly Hills film company expects to seek protection from its creditors with a Chapter 11 bankruptcy petition.

“As announced in the exchange offer,” the company said, “management believed that the successful consummation of the exchange offer was a prerequisite to the company’s obtaining the sufficient additional capital required for it to survive as a going concern.”

The firm also stated that, as previously disclosed, it did not make an interest payment due on the notes June 1 and that they are currently in default.

Trying to Reorganize

However, the Thursday statement concluded by saying that DEG management “is currently considering the alternatives available to the company.”

Asked about the likelihood of an obvious alternative--a Chapter 11 filing--Executive Vice President Mark Baron said he did not know, but he did not rule out such an action. Baron said a discussion of any alternatives would have to await the return Monday of Chairman Stephen Greenwald, who is on a business trip.

Even if DEG files for Chapter 11 protection, its present management likely would continue to operate the firm. The company has been trying to reorganize with a number of remaining assets, including a film studio in North Carolina and the domestic theatrical rights to its film library.

A Disappointment

Thursday’s announcement said the requisite 75% of the $65 million of outstanding bonds was not tendered and the exchange offer would not be extended further. The offer began June 1 and had been extended twice before.

Baron said he did not know the amount that had been tendered but called it “disappointing.”

DEG, which is planning to change its name to Vanguard Entertainment, has been struggling to find ways to rebuild after a long and disastrous series of box-office flops and consequent losses. Its founder, Dino De Laurentiis, stepped down last February, giving Greenwald a proxy to vote his 61% interest in the company.

Three top DEG executives have departed the company just in the past week.