The embattled German media group Kinowelt Medien reported that the restructuring measures aimed at streamlining operations had an "adverse effect" on its results for the first nine months of 2001.
In an official communique, the company reported that the termination of the Warner Bros film package deal this week had caused a three-digit million burden which had to be added to the losses of Euros 160m already recorded in the six-month report in August, thus giving an EBIT at the end of the three quarters of minus Euros 272.2m (2000: Euros 28.3m).
As a result of the considerable adjustments, disinvestments and cancellation of the Warner agreement, the balance sheet total on September 30 2001 was reduced by Euros 579.8m to Euros 704.9m compared with December 31 2000, and the balance sheet value of the Group's film stock was reduced following the termination of the Warner agreement by Euros 240.4m to Euros 374.8m. Equity capital shrunk in the nine months from Euros 340.9m to Euros 31.9m.
Results for license trading and theatrical distribution were significantly down on the same period for last year, while the consolidation in the Group's cinema operations and an upswing in admissions in the third quarter saw "significant increases in both turnover and earnings" for its theatrical exhibition arm..
A much more positive picture came - not unexpectedly - again from Kinowelt Home Entertainment (KHE) where turnover on Kinowelt's videos and DVDs increased by 54.3% to Euros 55.1m and the EBIT more than doubled from Euros 5m to Euros 12.4m. As KHE and the DVD mastering subsidiary digital images both noted, "the present financial situation of Kinowelt Medien AG will not have any repercussions for the DVD and video business of Kinowelt Home Entertainment GmbH. The exploitation of the extensive license stock will continue as usual"
However, although the Group is currently generating operative surpluses before interest, depreciation and debt repayment, its survival is not secured. "Kinowelt remains heavily burdened by its high indebtedness", the official communique noted, "the risk of insolvency is still acute", particularly following the decision of ABN Amro Bank to call in its loan of $64.1m (DM 140m) this week.
"Kinowelt Medien AG can only survive with the support of its creditor banks", the communique concluded.
Following the publication of its nine-month figures, Kinowelt was informed by the ABN Amro Bank that it has filed an insolvency suit against the assets of the beleaguered media concern. "Kinowelt regrets the bank's decision", a press communique declared. "Kinowelt will continue to strive for a consensual solution, and will also be holding talks with the Bavarian state government". The debt-ridden company's shares were at a new all-time low of Euros 0.42 on late Friday afternoon after trading in the shares had been stopped for two hours between 12.00 and 14.00.