The downtown theater is in foreclosure and will be sold at auction June 6 unless its owners make good on a $1.76 million debt.
Eugene-based Geiger Investments has not made its monthly payments on the debt for at least three months, according to the notice of sale. Property taxes also are due.
Geiger Investments bought the theater in 1997 for $1.3 million, according to real estate records.
In March 2005, it borrowed $1.63 million from BLX Capital LLC, putting up the theater building as collateral. The debt was later assigned to another company, SPCP Group, according to the trustee's notice of sale.
Geiger made only a partial payment in January, and missed $14,092 payments due in February, March and April, according to the notice.
Geiger also owes $50,198 in accrued and unpaid default interest dating from June 2005 and $19,748 in property taxes, the notice says.
According to a complaint filed in Lane County Circuit Court by lawyers representing SPCP Group, Geiger Investment has told the SPCP Group "that it does not intend on making payments required under the Note and Deed of Trust."
Geiger Investments, however, plans to make full payment on the promissory note and settle the foreclosure by the end of this week, managing partner Jeff Geiger said Wednesday.
"We've had some difficulty in the last six months and we are in the process of curing the debt," he said. "We have the funds available to cure it."
Geiger declined to discuss what sort of difficulty caused the company to stop making payments on the note, nor what financing arrangements it would use to make good on the debt.
The uncertainty surrounding the pending foreclosure sale has created strain for the main tenant of the theater building, Kit Kesey, who owns the business that operates the theater and books musical acts there.
Kesey said he first got notice from the lender about the foreclosure in January. He tried, and failed, he said, to get written assurances from Geiger Investments that he could do business in the theater past the June 6 foreclosure date.
"The nature of the business I'm in, you are paying deposits and contracting with acts quite a ways into the future," he said. "As soon as I contract with an act I owe them guarantee money."
Kesey said he's made his monthly lease payments to Geiger Investments on time and in full.
For now, Kesey said, he and the other tenants are "sitting back and waiting to see how this pans out." Other tenants include a taqueria, a juice bar, a dress shop, a book store, a clothing store, and a Tibetan gift store.
The McDonald Theatre opened on May 27, 1925, as the Lowell Theater and is listed on the National Register of Historic Places.
It served as a vaudeville hall and movie theater until 2001, when Regal Cinema closed the doors. Later that year, Kesey, nephew of author Ken Kesey, signed a lease to run the theater and began booking musical acts.
In November 2001, the theater hosted a memorial service for Ken Kesey.
(Copyright 2006 by The Associated Press. All Rights Reserved.)