Planet Hollywood To File Chapter 11

ORLANDO, Fla. (AP) - Theme-restaurant chain Planet Hollywood International Inc., partially owned by film stars such as Sylvester Stallone, plans to file voluntarily for Chapter 11 bankruptcy protection while it attempts to restructure its operations.  As part of the planned reorganization, the company's two largest shareholders and a trust for the children of the company's CEO have agreed to provide a $30 million cash infusion to help keep the international chain of glitzy restaurants going.

``We are confident we are taking the necessary steps to revitalize our Planet Hollywood operations,'' CEO Robert Earl said.  In a separate interview, Earl said the planned reorganization was necessary for Planet Hollywood to get out from beneath the burden of the $250 million in debt it is carrying.

Earl said the company plans to sell off its businesses in order to focus on the core Planet Hollywood concept. Though Earl declined to get into specifics, Planet Hollywood has been trying to sell its nine All-Star Cafes.

The bankruptcy filing is the latest chapter in what has been a tumultuous few months for the operator of nearly 80 movie-themed Planet Hollywood restaurants. Former president William Baumhauer resigned in June, just three months after the company's co-founder resigned his board position.

Keith Barish left the company in March, resigning as a board member after selling nearly half of his stock. Barish started the venture in 1991 with Earl and actors Stallone, Demi Moore, Arnold Schwarzenegger and Bruce Willis.

The company has been trying to cut operating costs by reducing corporate overhead, putting in cost-control systems, streamlining store-level operations and disposing of nonessential corporate assets.

Despite those moves, analysts have said aggressive expansion and increased competition have hurt the company.  Earl acknowledged this, saying some restaurants would shut down.  In April, the Orlando-based company failed to make a $15 million interest payment on $250 million in bond debt.  Last week, it reported a second-quarter loss of $28.2 million, or 26 cents a share, compared to a loss of $1.24 million in the year-ago period. Revenue in the three months ended June 27 fell to $76.6 million from $105.1 million a year ago.

The number of customers drawn to the trendy restaurants have declined and merchandise sales - which account for about one-third of the company's revenue - have dropped 31 percent.  Under the planned restructuring, to be filed by the end of the year, holders of $160 million of the debt will exchange it for $47.5 million in cash and $60 million in new bond debt. Those creditors would also receive a 26.5 percent stake in the restructured company.

The $30 million investment being made by Saudi Prince Alwaleed Bin Talal, wealthy Singapore businessman Ong Beng Seng and a trust in which the sole beneficiaries are Earl's children.  In exchange for the cash infusion, the investors' group will receive a 70 percent stake in the company, with the remaining shares available to other creditors.

All of the film stars who are currently involved with Planet Hollywood will remain on board, Earl said.  Shares of Planet Hollywood, which have been trading in limited volume on the New York Stock Exchange, finished unchanged at 75 cents.

LISTEN IN REAL AUDIO

Planet Hollywood Host Madeleine Brand talks with David Farcus of Chain Leader magazine about the filing for bankruptcy protection by the Planet Hollywood restaurant chain. The theme restaurant was the focus of much media attention when it opened in 1991, mostly because it was bankrolled by movie stars like Bruce Willis, Arnold Schwarzenegger and Sylvester Stallone. But Farcus says the food's expensive and not that great, and the products--T-shirts, jackets, etc--aren't selling that well.

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