Survival is becoming a day-to-day affair over at the reeling Canadian theatrical production company, Livent. According to a Nov. 25 article in Variety, Livent's cash flow will run dry on Monday, Nov. 30, unless a team of lawyers and bankers deliver $30 million more in short-term financing.
Shortly after filing for bankruptcy protection on Nov. 18, Livent announced it had secured $5 million in emergency monies. In that same announcement, the company revealed it was looking for "substantially larger" financing by the end of November. Spokesman Jim Badenhausen would not comment on the $30 million figure, but only reiterated Livent's intention to find further monies by Nov. 30.
According to Variety, Livent lawyers will be working over the Thanksgiving weekend with such financiers as GE Capital and Chase Securities.
Since delaying, on Nov. 13, the restating of its finances for the past three years, Livent's once mighty theatrical kingdom has been badly shaken. The anticipated bankruptcy filing came on Nov. 18, a last ditch attempt to keep creditors at bay while the company pursued financial restructuring in the wake of recently discovered "accounting irregularities" and "inappropriate business practices" by suspended founder and vice chairman Garth Drabinsky and suspended executive vice president Myron Gottlieb. On that same day, Livent fired Drabinsky and Gottlieb and authorized a filing in Ontario Court of a $225 million (CDN) civil damage action against Drabinsky, Gottlieb and a company owned by Gottlieb, alleging "fraud, conversion and unjust enrichment," according to a Livent statement.
Hours before the bankruptcy announcement, it was discovered that Livent's Ragtime national tour would close in Minneapolis on Nov. 21, its planned Seattle and Boston dates scrapped. (The tour has since been resuscitated by Pace Theatrical Group, Inc.) Late last week, speculation began that the former Broadway titan was on its last legs, and a break-up of the company was imminent, with various theatre owners and producers eagerly anticipating a fire sale of its various theatres and developing productions.
The latest news came yesterday, when Livent released an update that performances of all concerts in the American Airlines Concerts series at the George Weston Recital Hall at the Livent-operated Ford Centre for the Performing Arts are canceled, as are the Pantages Theatre's presentations of the Lincoln Center Jazz Orchestra with Wynton Marsalis. Tours of Bring in 'Da Noise, Bring in 'Da Funk, Peter Pan and Cirque Ingenieux, all part of the "Broadway at the Centre" series at the Ford Centre, have also been canceled.
The North York Performing Arts Centre Corporation (NYPACC) is poised to take over management of the troubled facility, where recent Livent productions of Show Boat, Ragtime and Fosse had their world premieres.
Badenhausen would not comment on the possible sale of Livent.
On Nov. 18, the company released its restated financial statements for 1996, 1997 and the first quarter (ending March 31) of 1998. The restated results (addressing previous statements from the Drabinsky regime) reduce net income for these periods "in an aggregate amount of $85.1 million (CDN) or $61.7 million (US)." For the second quarter 1998 (ending June 30, 1998), Livent reported a net loss of $45.8 million (CDN) or $31.7 million (U.S.).
Before stock exchange trading was halted in August, Livent was the world's only public company devoted solely to commercial theatrical producing.
The company outlined the "pervasive, systemic accounting irregularities" as such:
*Transactions improperly recorded as revenue.
*Operating costs improperly capitalized to fixed assets.
*Improper recording of costs.
*Improper recording of preproduction costs.
*Improperly accelerated recognition of revenue.
According to various sources, Livent's creditors include the Bank of Montreal, Fidelity Investments Canada Ltd., and the Canadian Imperial Bank of Commerce.
On Nov. 17, according to Variety, the credit agency Standard and Poor downgraded the rating of the company from triple C. The agency said the move "reflects concerns that Livent's capacity to service its outstanding obligations has been further eroded." It also advised that "A bankruptcy filing may become an appropriate option for the company."
Livent's troubles began in August, when it was revealed that accounting irregularities has occurred during the reign of now-ousted Livent founder Garth Drabinsky. Since then, the accounting firm of KPMG/Peat Marwick began poring over Livent's books.
Drabinsky, along with Livent co-founder Myron Gottlieb, was suspended on Aug. 10 by the company he helped create. Livent, which was taken over last spring by a new management group headed by Roy Furman and Mike Ovitz, cited accounting regularities totaling in the millions. Furman subsequently named Roundabout artistic director Todd Haimes to take Drabinsky's place.
Livent recently withdraw its claim on 42nd Street's Times Square Theatre. On Aug. 5, Livent signed an option of the playhouse -- the last theatre on the block between Seventh and Eighth avenues to be claimed. The company has since rethought the move. "We determined that our proposal did not deliver sufficient returns for the company," said Furman at the time.