The company operating the Vancouver Playhouse Theatre has announced it is closing down after staging productions in the city's downtown for 49 years.

The company said Friday that its operation of the 655-seat theatre, adjacent to the much larger Queen Elizabeth Theatre, has built up a debt exceeding $900,000, a spokesman said in announcing the closure Friday.

"We can't continue operations with the amount of debt that we have and no realistic way of paying it back," said Playhouse theatre company chair Jeff Schulz.

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The cast of The Drowsy Chaperone perform at the Playhouse Theatre in 2009. (David Cooper/Playhouse Theatre)

The decision to shut down was taken at a board meeting that went into the wee hours of Friday morning.

The building is owned by the City of Vancouver, but  since it opened in 1962, the theatre was in debt to the city.

The city forgave nearly $500,000 of that debt in June 2011 and provided another $400,000 to cover expenses, but it's still not enough.

"It would take a million dollars to get us whole and keep us going and then another half a million dollars in each subsequent year," Schulz said.

Schulz said the company's final performance at the theatre will take place Saturday.

With files from the CBC's Emily Elias