RHI Entertainment Starts Voluntary Chapter 11 Proceedings
Financially strapped RHI Entertainment, a leading producer and distributor of TV movies and miniseries, said Friday it has started voluntary Chapter 11 bankruptcy proceedings that will wipe away $309 million in debt.
Under the plan, creditors will take an 85% ownership stake in the company, with the remaining 15% maintained by president and CEO Robert Halmi Jr., whose father founded the company in 1979.
Hallmark Cards purchased RHI in 1994, and Halmi Jr., along with other top executives and affiliates of investment firm Kelso & Co., acquired the company in 2006, saddling it with $609 million in debt. It proved an unmanageable amount when worldwide ad rates plunged 22% in 2008, Halmi Jr. said Friday.
After the bankruptcy, the company's debt will stand at $300 million. Kelso and public shareholders will have lost as much as $280 million as the stock, which traded for $13 a share two years ago, was at a nickel on Friday. Halmi Jr.'s personal wealth has taken a $6.5 million hit.
The company, though, has managed not to skip a beat in terms of output. Halmi Jr. said it has no plans for laying off any of RHI's 78 employees, and the company delivered six telefilms this month, including The Santa Incident, which was seen Thursday in 1.4 million households on the Hallmark Channel.
"The most important consideration was to fill our distribution pipeline without any disruption," Halmi Jr. said.
The company produces and distributes some 30 longform shows a year. One in the works now, Neverland, is a $20 million four-hour prequel to the Peter Pan story that Halmi Jr. said "has more special effects than Avatar and is probably the best thing we've ever done."
That's saying something, considering RHI was behind Lonesome Dove, which won seven Emmys in 1989.