General Cinema Hints Deal With HBJ Shaky
BOSTON — General Cinema Corp. signaled Wednesday that a proposed merger with Harcourt Brace Jovanovich Inc. was in trouble as talks broke off with Harcourt bondholders who hold a key to the $1.4-billion deal.
The offer is now set to expire 5 p.m. today, and General Cinema said it “may terminate the merger agreement” if the offer expires without the necessary purchase of securities.
The news was not good for Harcourt, an Orlando, Fla.-based publishing and insurance company that has been burdened with nearly $2 billion in debt.
Harcourt has been looking for a buyer to infuse the company with cash, and a breakdown of the merger could lead Harcourt to file for protection from creditors in U.S. Bankruptcy Court, said Bert Boksen, a publishing industry analyst at Raymond, James & Associates in St. Petersburg, Fla.
“It would appear to me the deal is in serious trouble,” Boksen said.
General Cinema, based in Newton, Mass., announced the deal in January and had already extended its tender offer twice to the bondholders.
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