Regal Parent Cineworld Has Declared Bankruptcy.
Cineworld, the world’s second-largest movie theater chain, filed for Chapter 11 bankruptcy. The company has secured a $1.94 billion debtor-in-possession financing facility from existing lenders to keep things running during this difficult time.
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Cineworld expects to emerge from Chapter 11 in the first quarter of 2023, while meanwhile, it will pursue. “a real estate optimization strategy in the US,” i.e., some closures or sales of theaters, along with “engaging in collaborative discussions with US landlords to improve US cinema lease terms.”
Cineworld stated that they are confident that a financial restructuring would be in the best interests of not only the company but all those who have a stake in it for the long term. “Cineworld looks forward to working with its creditors and stakeholders to advance the Group’s efforts to restructure its balance sheet.”
Cineworld, the parent company of Regal Cinemas, filed for bankruptcy in the Southern District of Texas after accumulating a sizable amount of debt. Last month, Cineworld announced that it was considering measures such as voluntary bankruptcy.
Here’s what it said today:
“Cineworld Group plc and its subsidiaries…, a leading cinema operator in 10 countries including the United States and the United Kingdom with 747 sites and 9,139 screens globally, today announced that Cineworld and certain of its subsidiaries (collectively, the “Group Chapter 11 Companies”) have commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of Texas.
As part of the Chapter 11 cases, Cineworld, with the expected support of its secured lenders, will seek to implement a de-leveraging transaction that will significantly reduce the Group’s debt, strengthen its balance sheet and provide the financial strength and flexibility to accelerate, and capitalize on, Cineworld’s strategy in the cinema industry. The Group Chapter 11 Companies enter the Chapter 11 cases with commitments for an approximate $1.94 billion debtor-in-possession financing facility from existing lenders, which will help ensure Cineworld’s operations continue in the ordinary course while Cineworld implements its reorganization.”
Cineworld plans to keep the company’s global operations and cinemas — including Regal, Cinema City, Picture House, and Planet — functioning normally throughout the process with no interruption, maintaining customer membership programs such as Regal Unlimited and Regal Crown Club in the United States and Cineworld Unlimited in the UK.
Any de-leveraging transaction the company performs will result in the dilution of existing equity interests for stockholders. — “and there is no guarantee of any recovery for holders of existing equity interests.” The company does not anticipate the Chapter 11 filing to impact its trade on the London Stock Exchange.
In the meantime, the company’s board of directors is negotiating with stakeholders to develop a reorganization plan filed “in due course.”
“The pandemic was an incredibly difficult time for our business, with the enforced closure of cinemas and a huge disruption to film schedules that has led us to this point,” said CEO Mookie Greidinger. “This latest process is part of our ongoing efforts to strengthen our financial position and is in pursuit of a de-leveraging that will create a more resilient capital structure and effective business. This will allow us to continue to execute our strategy to reimagine the most immersive cinema experiences for our guests through the latest and most cutting-edge screen formats and enhancements to our flagship theatres. Our goal remains to further accelerate our strategy so we can grow our position as the ‘Best Place to Watch a Movie.”
The epidemic’s impact was particularly severe on the exhibition industry, which had many of its movie theaters closed for months. In addition, the box office saw a series of tentpoles bolstered attendance earlier this year trail off into a soft slate in August and September.
The exhibitors already in debt before the pandemic were negatively affected the most. Cineworld took on a large amount of debt when it acquired Regal in 2018 for $3.6 billion, and while it made some progress in repayments, it was still struggling before Covid-19 hit. The company has about $5 billion in outstanding debts. A Canadian judge ruled last year that Cineworld is liable for more than $1 billion in damages for backing out of a deal to buy Cineplex.
Vue International is joining other companies in restructuring. AMC Entertainment was able to remain afloat during bankruptcy, partially due to it being transformed into a meme stock, leading to more prosperous dealings. With an overflow of screens in America, it only makes sense that some chains will have to merge–particularly those running low on financial aid from Covid relief funds.
During the transition, Cineworld plans to keep its worldwide theater and cinema business — including Regal, Cinema City, Picture House, and Planet — operating without interruption. Customer membership programs, such as Regal Unlimited and Regal Crown Club in the United States and Cineworld Unlimited in the UK, will all be honored.
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