AMC Entertainment is in final negotiations to sell off its multiplexes in Spain and Portugal to UK private equity firm Terra FirmaCapital Partners.

AMC and Cinesa (the Spanish brand of TerraFirma-owned UCI) have reached an agreement for the "potential acquisition" of AMC's cinemas on the Iberian Peninsula, according to a Terra Firmarepresentative.Closing of the deal is subject to various unspecifiedconditions still under negotiation.

Thepurchase would encompass a total of 86 screens in four AMC multiplexes in Spain and another 20screens in Portugal, and would make Terra Firma the largest exhibition playerin Spain following its October 2004 acquisition of Cinesaand its May 2005 buy-out of both Warner's and Lusomundo'sshares in the Warner Lusomundo Sogecablechain.

The nextbiggest chain in Spain is run by YelmoCineplex, a joint venture between Spain's Yelmoand US-based Loews Cineplex. The latter just completed a merger with AMC last month.

AMC follows other exhibitors in abandoning the Spanish market, including Cinesa-UCI owners Viacom and VivendiUniversal, and Warner Lusomundo Sogecablepartner Warner Bros.

Just lastweek the exhibitors' federation in Spain (FECE) released a report warning ofthe "context of uncertainty" surrounding the sector, which saw box officegrosses drop by 9.5% year-on-year in 2005 and admissions decrease by 12.7% to122.2m, the lowest level recorded locally since 1998.

The reportnotes that screen count is still on the rise in Spain, although the number of cinemas hasdecreased due to multiplexing, while the sector faces major challengesincluding the box office decline, alleged price fixing by distributors, screenquotas and piracy.