De Laurentiis Has Loss, Halts Release of Movies : Firm Still Seeking Buyers for Film Library, Studio After Posting $15.7 Million in Red Ink

Financially strapped De Laurentiis Entertainment Group on Tuesday reported net losses of $15.7 million for its third quarter ended Nov. 30, 1987, bringing the company’s cumulative losses to $36 million for the first nine months of its fiscal year.

The entertainment company reiterated its hopes of finding buyers for its 350-title film library or its movie studio in Wilmington, N.C., but officials said no agreement has been reached.

“There is no one definite at this point. Discussions are ongoing at this point with several companies,” said Steven Zeller, the company’s West Coast director of publicity.

Meanwhile, the company has temporarily halted distribution of its films and laid off “four or five” people in its distribution and marketing unit, according to Laurence D. Gleason, president of the distribution subsidiary.

“We’re not releasing any pictures at the moment while we financially reorganize,” Gleason said. “We expect to get back in the distribution business in the next four to six weeks,” he said, “whether it’s us alone, (through) a third party or a joint effort.”

In a prepared statement, the Beverly Hills company said it is “firming plans” for the release of up to nine movies during 1988. Last month, the company announced that plans were being “firmed” for the release of 11 films, but Gleason said DEG decided not to buy distribution rights to “Slave Coast” and is still in negotiations on “Blue Jean Cop,” one of the previously announced titles.

$6.1-Million Writedown

DEG officials said a board meeting scheduled for Tuesday was postponed until later this week or early next week, due to travel problems encountered by some out-of-town board members. One DEG executive said the departure of company Chairman Dino De Laurentiis may be one of the board’s topics. De Laurentiis said two months ago that he was discussing his possible resignation from the $850,000-a-year chief executive’s job.

The company said it took a $6.1-million writedown for four box-office disappointments--including “Weeds” and “Date With an Angel”--that were released during the third quarter. The company also took a $3-million writedown on its investment in “Total Recall,” a suspended movie project.

DEG reported revenue of $20.5 million for the quarter, up from $14.6 million in the year-earlier quarter.

If DEG is successful in selling any of its assets or subsidiaries, it has agreed to pay 80% to 100% of the sale price to a group of banks that granted the company a $75-million line of credit in 1986, according to a document filed with the Securities and Exchange Commission.

Stock Price Slips

As of Nov. 30, DEG owed the bank group $59.4 million. The company said it has agreed not to borrow additional amounts under the credit agreement.

The company told the SEC that it has additional obligations of $50 million to independent film producers who are supplying movies to DEG. Because of its financial problems, the company said it is trying to negotiate term loans with the lenders who backed those outside projects to satisfy about $42.5 million of those obligations.

If DEG fails to negotiate such deals, the company noted, the banks that financed the independent productions may have the legal right to take the films to other distributors.

The entertainment company’s net worth, or assets minus liabilities, has fallen to $12.3 million from $47.9 million nine months earlier.

The price of DEG shares on the American Stock Exchange closed Tuesday at $1.25, down 25 cents, with a volume of 20,500 shares.

The company’s shares sold for $12 when DEG went public in mid-1986 and traded as high as $19.25 in the following months. But a steady string of box-office failures--particularly last summer’s costly release, “Million Dollar Mystery”--drove DEG shares down to a $5-$6 range in June, 1987. At that time, Paine Webber, the Wall Street firm that underwrote the company’s initial offering, dropped its “buy” recommendation of the company’s stock.

Paine Webber and another investment banking firm--Bear, Stearns & Co.--continue to explore DEG’s alternatives, the company said.