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Swank Movie Chain Balks RSA Loan, Files Bankruptcy

Luxury movie theater chain IPIC Entertainment filed for Chapter 11 bankruptcy on August 5, with the Retirement Systems of Alabama owning 39.2 percent of the company’s stock and having extended a credit line of $204 million to the troubled entertainment company. IPIC said it will seek approval of either a sale or a reorganization plan.

While doing so, company operations “will be supported by debtor-in-possession financing provided by the Retirement System of Alabama,” says the company’s press release.

Failure, on July 1, to meet an interest payment due on the RSA loan led to a regulatory filing, on July 31, that declared, “We do not have adequate cash on hand or other available assets to repay our outstanding indebtedness and RSA could foreclose upon the property that is pledged to secure the credit facility.” That facility, it added, “includes substantially all of our assets.”

IPIC Entertainment, based in affluent Boca Raton, has been a leader in the concept of maximum comfort, dine-in movie theaters. But the cost and pace of building ever more luxury theaters proved too rich for IPIC.

The company went public in February of 2018, raising $15.1 million to fund its expansion, with stock trading at $14.8. It was trading $0.6868 on August 5.

“IPIC was the first and only company building luxury theaters just 10 years ago, which led to double digit growth year over year before the industry took notice,” said IPIC CEO Hamid Hashemi in the company’s Chapter 11 release. “IPIC’s business plan called for building 25 locations in 4 to 5 years. Delays in development cycle combined with the high cost of capital depleted IPIC’s available resources before the company was able to reach critical mass and become self-funded.”

On the board of IPIC Entertainment is George Philip, retired University of Albany president, who served as an officer with the New York State Teachers’ Retirement System and also is on the board of Community Newspapers Holdings Inc., which is owned by the Retirement Systems of Alabama.

Mobile’s Economy is on the Move

Past meets present in downtown Mobile where the RSA-towered skyline lofts above the Fort of Colonial Mobile, with roots some 300 years old. Photo courtesy of Alabama Tourism Department/Chris Granger

For centuries, Mobile County has been Alabama’s connection with world commerce. Increasingly, its economy is based on moving things in and out.

Airplanes arrive in pieces and fly out as fully assembled jets. Lately, aerospace developments involving Airbus have been making the most business news, but shipbuilding remains strong as does manufacturing.

Items that will line the shelves of some 800 Walmart stores are shipped to a new regional distribution center to go on to other distribution centers. Cargo of all kinds comes and goes via water, railroad and truck. Jobs multiply to keep everything moving. From steel mills to beaches, the Mobile County economy is diverse, and it’s international.

The Mobile County Public School System remains the county’s largest employer, with 7,500 workers. The University of South Alabama, with its medical school and expanding health care system, is in second place with 6,000 workers. And Infirmary Health — with its flagship Mobile Infirmary in the city — remains the largest non-governmental health system in Alabama.

The single biggest economic development has to be Airbus, not only because of a second final assembly plant for the A220 jet that is under construction next door to the original A320 series plant, but because even more suppliers and other associated business are coming in, creating even more new jobs. It’s all happening even faster than Bill Sisson, president and CEO of the Mobile Area Chamber of Commerce, had hoped.

“The main thing is that in aviation aerospace in particular, that sector is probably going to grow faster, fill out more quickly than we had anticipated,” Sisson says. “What’s also good news is that both of those aircraft, the 320 line and the 220, are very hot-selling aircraft. For them to be here in Mobile, that just bodes well.”

The county also is seeing growth in shipping, shipbuilding, steel manufacturing, distribution facilities, construction, business incubation and health care, among other sectors.

“That’s the beauty of our economy here, it’s so diverse,” says Mobile County Commission President Connie Hudson. “We’re seeing some steady growth across the board in all sectors of our economy. Even when one should dip, the others aren’t.”

Local and state governments, along with the Chamber of Commerce, have established a record of working together in economic development over the last 20 years, regardless of politics or who occupied what public office.

“I think we are all like-minded when it comes to successfully recruiting business and industry to the state and particularly here in Mobile,” Hudson says.

Sisson says Mobile is the right size to present a united front in recruiting new businesses, and the considerably lower cost of living is a major factor. “When a business prospect is looking at this area, all the partners are at the table extending help,” he says.

What happens next? More aerospace, more transportation, more port-related development and more business incubation, Sisson says. “We’re seeing more and more distribution activity related to the container terminal. That’s certainly very promising and that’s happening simultaneously with what’s going on in the aviation-aerospace sector.”

The chamber will be moving into talent development and recruiting for the labor force, as well as for new business, he says. A recent chamber-commissioned study of the labor force revealed that 5,000 new, high-paying jobs had been created in the area in the last four years.

Mobile City Council Vice President Levon Manzie cites Airbus, Austal USA’s contracts for the U.S. Navy and Continental Aerospace’s new facility in saying, “The sky’s the limit.” But he’s especially excited about the new Mobile Downtown Airport at the Mobile Aeroplex at Brookley, where Frontier Airlines has begun passenger jet service to Chicago and Denver.

“The eventual movement of the airport to Brookley Field Complex is going to be big for the city of Mobile,” Manzie says. “Eventually you’ll see all the airlines follow suit, and they’ll build out the total complex.

“I believe the next 10 years will be game-changing years for the city of Mobile.”

Jane Nicholes is a Daphne-based freelance contributor to Business Alabama.

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