Spanish exhibitor Abaco files for bankruptcy

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SAN SEBASTIAN, Spain -- Spain's biggest exhibitor has filed for the country's equivalent of Chapter 11, citing difficulties in meeting upcoming bank payments.

Abaco, which owns 42 multiplexes in Spain -- with 450 screens and 1,200 employees -- said it requested a suspension of payments to creditors last week.

"The measure is a direct consequence of the profound crisis the Spanish sector is going through," a spokesman for Abaco said in an interview Tuesday, citing plummeting ticket sales, rampant pirating, shorter theater windows and growing free-time alternatives.

The deal allows Abaco to suspend payments to creditors so that can afford its operating costs and will permit renegotiating with a pool of creditors, rather than one on one.

The spokesman said the company resorted to the measure after previously trying to address the situation using an attack plan designed by KPMG, which called for additional bank credit, refinancing the loan and selling off non-productive assets.

Last year, the group bought Cinebox for about €60 million looking to raise its profits by growing the size of its circuit.

"Abaco thought the deal was feasible, even with the debt Cinebox brought with it. But the market has behaved in a way that makes the debt payment impossible at this time," the spokesman said.

Spanish capital risk fund Mercacapital bought 90% of Abaco in 2005 for €55 million.
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