Watershed Asset Raises Stake in Carmike Cinemas (CKEC), Managing Member Nominated to Board

In an amended 13D filing on Carmike Cinemas Inc. (Nasdaq: CKEC) after the close Monday, Watershed Asset Management disclosed a 6.7% stake (853K shares) in the company. This is up from the 6.4% stake the firm disclosed in a quarterly filing with regulators.

The investment firm noted that the Company nominated a Managing Member of the firm, Kevin D. Katari, for election to the Board of Directors. If elected, Mr. Katari intends to serve on the Company's Board.

In the filing the firm also noted, as part of their ongoing review, they have sought and may continue to seek the advice of legal and financial advisors to assist them in such review and in evaluating alternatives that are or may become available with respect to the Company or their holdings in the Company. Also, consistent with their investment intent and in an effort to maximize shareholder value, the firm have had and may continue to have discussions with the Company's management and/or stockholders regarding alternatives for enhancing stockholder value. The firm may engage in communications with one or more shareholders of the Company, one or more officers of the Company, one or more members of the board of directors of the Company, potential investors in the Company and/or other persons regarding the Company, including but not limited to its operations.

Carmike Cinemas, Inc. is a premiere motion picture exhibitor in the United States with 297 theatres and 2,455 screens in 37 states, as of June 30, 2006. Carmike's focus for its theatre locations is small to mid-sized communities with populations of fewer than 100,000.

Watershed Asset Management is a San Francisco-based hedge fund, started in July 2002 by Meridee A Moore. According to its website, the firm's investment objective is to seek consistent, absolute returns by investing in situations that are undergoing change. Moore was previously a Managing Member of Farallon Capital Management LLC.

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