Loews Cineplex Entertainment Announces Senior Lenders Block Interest Payment On 8 7/8% Notes

Business Wire, Feb 1, 2001

Business Editors

NEW YORK & TORONTO--(BUSINESS WIRE)--Feb. 1, 2001

Loews Cineplex Entertainment Corporation (NYSE:LCP; TSE:LCX) announced today that the administrative agent under the Company's senior bank credit facilities has delivered a payment blockage notice to the Company and the indenture trustee of its 8 7/8% Senior Subordinated Notes due 2008, prohibiting payment by the Company of the semi-annual interest payment of approximately $13.3 million due to noteholders on February 1, 2001. The notice, which could prohibit Loews Cineplex from making any payments on the notes for a period of up to 179 days, was delivered as a result of the Company's non-compliance with a formula-based financial covenant, which requires the maintenance of certain specified leverage ratios. These covenants are included in the Company's Senior Secured Revolving Credit Facility (the "Credit Facility").

As previously announced, the waiver of compliance with various financial covenants from the syndicate banks (the "Bank Group") that provide funding to the Company under its Credit Facility has expired, and the Company is in active discussions with the Bank Group to address, among other things, the Company's liquidity needs. The Company believes that it has adequate available cash to fund its ordinary course working capital needs during the course of these discussions.

The notice of default is not an acceleration of the maturity of the Company's debt obligations under the Credit Facility, and the Company is current in all its payment obligations under this facility. While the Company continues to explore various strategic alternatives with the Bank Group to develop a long-term financial plan for the Company, there can be no assurance that these discussions will be successful. If the Company is unsuccessful in these discussions, the Bank Group could accelerate the maturity of its loans. Additionally, if the Bank Group exercises this option, the trustee of the notes would have the right to accelerate the maturity of the indebtedness evidenced by the notes. The trustee would also have the right to accelerate the maturity of this indebtedness in the event that the payment of the blocked interest is not made by March 2, 2001. The Company is not currently in a position to refund this indebtedness should it be declared due and payable, and, as a result, it may be forced to seek protection under federal bankruptcy laws.

The Company continues to meet with participants at various levels of its capital structure to identify and implement a longer-term financial plan to address its liquidity needs and consider various restructuring alternatives. No assurances can be given that any potential restructuring will be negotiated on terms that will allow the payment of semi-annual interest to the noteholders.

Loews Cineplex Entertainment Corporation is one of the world's largest publicly traded theatre exhibition company in terms of revenues and operating cash flow, with 2,965 screens in 365 locations primarily in major cities throughout the United States, Canada, Europe and Asia. Loews Cineplex's divisions include Loews Cineplex United States, Cineplex Odeon Canada and Loews Cineplex International. Loews Cineplex operates theatres under the Loews, Sony, Cineplex Odeon and Europlex names. In addition, the Company is a partner in Magic Johnson Theatres and Star Theatres in the U.S., Yelmo Cineplex de Espana, De Laurentiis Cineplex in Italy, Odeon Cineplex in Turkey and Megabox Cineplex of Korea.

This press release contains forward-looking statements regarding the Company's results and prospects. Actual results could differ materially from these statements. The forward-looking statements in this press release should be read in conjunction with the factors described in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations--Factors That May Affect Future Performance" in the Company's Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2000, which, among others, could cause actual results to differ materially from those contained in forward-looking statements made in this press release and in oral statements made by authorized officers of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.