Loews Cineplex has seen its debt ratings downgraded to low junk status by US ratings agency Moody's Investor Service.

The ailing exhibitor operates more than 2,900 screens in almost 400 theatres in North America and Europe. While a negative report was expected - Loews Cineplex has warned that it may default on bondholder interest payments falling due in February 2001 - it highlights the dire state of North American exhibition, particularly the company's Canadian circuit.

The report suggested Loews will be a "survivor" in the exhibition industry but that bankruptcy filings in some parts of the enterprise might be a short-term solution to ensure the chain's viability. And it singled out the firm's Canadian subsidiary Cineplex Odeon, which operates 859 screens, as a good place to start: "The badly underperforming Canadian assets, and those of Cineplex Odeon more broadly, need to be addressed and, in all likelihood, closed for the most part."

The report reads: "It is no longer apparent to Moody's that some event in the future, any one of which had been deemed to be a reasonable possibility of occurring in the past, will be sufficient to facilitate a return to fiscal health, yet alone occur, short of a full-fledged restructuring."

Three major US chains have filed for bankruptcy protection: Edwards Theatres, Carmike Cinemas and United Artists.