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Cash for Planet Hollywood
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August 6, 1999: 2:35 p.m. ET
Vornado Realty buys company's 20% stake in hotel, calls off further hotel deal
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NEW YORK (CNNfn) - Vornado Realty Trust announced Friday it has bought the remaining 20 percent stake in New York's Hotel Pennsylvania from beleaguered restaurant operator Planet Hollywood for $18 million in cash and $25 million in debt.
But Vornado also announced it was pulling out of a licensing deal with Planet Hollywood for an Official All-Star Hotel.
Vornado (VNO) and Planet Hollywood officials did not return calls for comment.
The trust's purchase of the Hotel Pennsylvania stake provides a much-needed injection of cash for the theme restaurant company, which teetered on the brink of bankruptcy in May after missing a $15 million bond interest payment.
Launched in 1991 by Hollywood film producer Keith Barish and theme restaurant entrepreneur Robert Earl, Planet Hollywood (PHL) quickly established a worldwide brand name by featuring movie memorabilia in its restaurants and by attracting a star-studded investment pool -- including the likes of Arnold Schwarzenegger, Demi Moore, Bruce Willis and Sylvester Stallone.
But the company's star quickly faded amid complaints about the quality of its food and investor concerns about its rapid expansion.
On Thursday, Vornado reported an increase in second-quarter net income to $52.0 million, or 50 cents a diluted share, from $36.3 million, or 37 cents a share, a year earlier. Revenue rose to $166.2 million from $128.5 million.
Funds from operations for the quarter hit 78 cents a share versus 65 cents a share in the second quarter last year. Funds from operations is widely considered a key measure of earnings for real estate companies.
In Friday afternoon trading, shares of Vornado rose 1/16 to 34 1/16. Shares of Planet Hollywood also rose 1/16, to 13/16.
-- from staff and wire reports
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Planet Hollywood
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