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Company Profile
Muvico: Judgment Day
A chain of luxury movie theaters brings fame and fortune to its founder, a visionary immigrant. But the founder and his investors fall out.
Muvico: Now Playing Theaters: 13, in Boca Raton, Davie, Estero, Hialeah, Orlando, Palm Harbor, Pompano Beach, St. Petersburg, Tampa, West Palm Beach, Hanover, Md., and Memphis |
Cue the wistful music.
In 2000, a group led by private equity firm Fleet Equity Partners (now known as Nautic Partners) of Providence, R.I., invested $41.5 million in the chain. Others in the group included existing Muvico investors Amaturo and BCI Partners,
a Teaneck, N.J., venture capital outfit. The share of ownership held by Hashemi and his wife, Deane, Muvico's vice president of operations, fell to about 15%.
The cash enabled Hashemi to finish several theaters and move into the Tampa region, Tennessee and Maryland. As he opened more theaters, revenue jumped to $102 million in 2001, good enough to debut at No. 164 on Florida Trend's listing of the state's largest private companies. He topped the chain out at 12 theaters, small by national standards but the envy of the industry for its style and attendance. Three of the 12 theaters routinely number among the most visited in the nation. Meanwhile, the rest of the movie industry slumped, with ticket sales falling and six chains seeking bankruptcy court protection at the turn of the decade to escape debt incurred in a 1990s expansion race.
As that happened, Hashemi's vision grew more grandiose. In 2003, he announced Muvico Empire, theater-anchored attractions offering movies, bowling, billiards, a bar, a restaurant, video games and more.
Against the backdrop of Hashemi's expanding plans and an industry breakdown, strife developed among Muvico's investors, and in 2003 the company's management committee quietly began shopping the company, according to a later lawsuit by Hashemi. Revenue fell 3% to $123 million in 2004. By 2005, Muvico was in a bind.
The theaters still glowed, with an article in the New York Times calling Muvico "pretty close to the gold standard" for luxury. But Muvico's revenues fell nearly 1% to $122 million. Compared to the rest of the industry that was a strong performance, but the company's debt was maturing, and it was short of capital to meet its expansion commitments.
Hashemi tried to seize the moment. Working with Stuart Miller, CEO of the nation's largest home builder, Miami-based Lennar, Hashemi bid a reported $136 million for his company. But he had competition. AmStar Stadium Cinemas, a seven-theater, Alabama-based chain, bid $125 million. AmStar's investors include Muvico investor BCI Partners' Theodore Horton.
The AmStar/Horton bid won. Even though Hashemi's offer was higher, Muvico's governing committee apparently didn't view his bid as serious, according to court filings.
