Discovery Zone is being born again after 16 months in the womb of Chapter 11.
On Tuesday, the Fort Lauderdale-based company emerged from reorganization after filing last year for protection from creditors under the U.S. bankruptcy code.
The chain of indoor play centers has reduced its debt, has a new owner and an $100 million infusion of capital.
But does it have a new strategy for success?
Scott Bernstein, chief executive officer for Discovery Zone, said he will reposition the play centers as a "fresh, exciting entertainment venue for kids and families."
Plans call for a $20 million overhaul of the 208 indoor playgrounds across the country. That includes a wider variety of entertainment "that will encourage kids and their parents to return again and again," he said.
Discovery Zone will provide more interactive experiences for children and their parents, such as arts and crafts, and music classes for toddlers, Bernstein said. There will also be videos and Discovery Zone's branded version of laser tag.
But the latest twist offered by Discovery Zone's new management are promotional tie-ins with other brand names.
World of Nerf, for example, will be "pre-testing" its nerf toys at Discovery Zone. Children who win games will be given gift certificates for Toys R Us. And Pizza Hut and Pepsi have been signed on to provide food and drink. Discovery Zone also has promotional alliances with the World Wrestling Federation and New Line Cinema.
Does Bernstein have any concern that some parents might be turned off by the commercialization of Discovery Zone?
"We're trying to provide leading entertainment experiences to kids, tied in with what's hot with kids," Bernstein said. "It's nothing more than cross promotion."
Discovery Zone will build on its target market of 4- to 10-year-olds with programs such as Mommy and Me classes, Bernstein said.
The strategy for the reinvented Discovery Zone comes from the new management team and research with parents, Bernstein said. "We want to make Discovery Zone much more parent friendly. We'll also be putting in more comfortable seating. . . . The experience will be more controlled."
Discovery Zone, formerly publicly traded, is now private and owned by New York-based Wellspring Associates, which last year brought in Bernstein to manage the company. The common stock has been retired; large creditors such as food service companies and other suppliers were given equity in the new company, he said.
Discovery Zone formerly was managed by Blockbuster Entertainment, which hired former retail executive Donna Moore to turn it around. Moore also planned new entertainment offerings and closed stores. But with losses mounting, Discovery Zone entered bankruptcy reorganization in March 1996.
Bernstein was given the reins by Birch Holdings, which held most of Discovery Zone's senior unsecured bank debt. Birch is the parent company of new owner Wellspring Associates.
The company now is a much healthier one, Bernstein said. "We have $85 million in debt; we used to have $400 million." Total stockholders' equity is $85 million.
Shares in the company, traded under the symbol ZONEQ on Nasdaq, jumped 8 cents to close at 10 cents on Tuesday, with 1.61 million shares trading hands.
Bernstein, a former senior executive with Six Flags Theme Parks and Time Warner, said Discovery Zone has expansion plans, but not until its existing stores in the United States, Canada and Puerto Rico are revitalized.
The company said it will keep about 40 employees in Fort Lauderdale but would be moving about 20 to White Plains, N.Y.