Planet Hollywood, Iridium Stumble


Bankruptcies from two major junk bond names were the buzz last week, leading to talk that not only those bonds but others in their respective industries will feel some of the pain as investors sell their holdings. And the issuers had the misfortune of hitting the skids during a down cycle, when buysiders will not have much sympathy for the under-performing issues in their portfolios.

Planet Hollywood, the long-troubled theme restaurant chain, got bondholders' consent last week on its petition. It needed the bond investors' approval to get an equity cash infusion from a group that includes two of its largest shareholders - Saudi billionaire Prince Alwaleed bin Talal and Singapore hotel mogul Ong Beng Seng.

The group, which would end up with 70% of the equity, reportedly maintains it can make a go of it after it sheds some of the unprofitable businesses and focuses solely on the core Planet Hollywood idea. However, one high yield investor who is not part of the deal said that the buy-side has long been skeptical that the core idea - Hollywood memorabilia and the off-chance to see a celebrity - is enough to offset an $8 hamburger.

(Planet Hollywood was highlighted as long ago as November 1998 as a disappointing bond in HYR's annual "turkey issue"column.)

The other notable recent bankruptcy came from satellite company Iridium.

In the latest chapter of the ongoing Iridium saga, the issuer said that bondholders had rejected a swap of $1.45 billion of debt for a 33% stake in the company. The proposal was prompted by a default on $1.55 billion worth of bank loans after failing to meet its customer expectations.

Satellite analysts said that will spell trouble for the other satellite companies Globalstar and ICO Global (see story on page 1) as the issuers often move in the secondary in sympathy with one another's woes.