Cineworld Group has entered into “restructuring support” and “backstop commitment” agreements with its lenders that could help the Regal Cinemas owner emerge from Chapter 11 bankruptcy.
The lenders hold and control approximately 83% of the group’s term loans due in 2025 and 2026 and a revolving credit facility due in 2023.
If implemented, the proposed restructuring would reduce the Group Chapter 11 Companies’ funded indebtedness by approximately $4.53 billion, primarily through lenders receiving equity in the reorganized group in exchange for the release of their claims. It would also raise $800 million in aggregate gross proceeds through a fully backstopped equity offering to the legacy lenders and a direct equity offering to certain legacy lenders. Additionally, it would provide $1.46 billion in new debt financing to the Group Chapter 11 Companies upon their emergence from the Chapter 11 cases.
“This agreement with our lenders represents a ‘vote-of-confidence’ in our business and significantly advances Cineworld towards achieving its long-term strategy in a changing entertainment environment,” Cineworld CEO Mooky Greidinger said in a statement. “With a growing slate of blockbusters and audiences returning to cinemas in increasing numbers, Cineworld is poised to continue offering moviegoers the most immersive cinema experiences and maintain its position as the ‘Best Place to Watch a Movie.”
The proposed restructuring does not provide any recovery for holders of Cineworld’s existing equity interests.
In addition to the agreement with lenders, Cineworld plans to abandon its effort to sell the group’s business in the U.S., U.K and Ireland, absent an “all cash bid significantly in excess of the value established under the Proposed Restructuring.”
On February 24, Cineworld received non-binding proposals for some or all of the group’s assets from a number of potential transaction counterparties. The company noted that it continues to consider the proposals received with respect to its Rest of the World business outside of the U.S., U.K. and Ireland and a process is underway with the bidders to assess whether a sale can be completed.
“It is expected that the Plan will provide sufficient flexibility to accommodate a sale of the RoW Business, assuming that the Marketing Process leads to a sale transaction supported by the Group Chapter 11 Companies and their stakeholders,” Cineworld said. “As previously announced, it is not expected that any sale transaction would provide any recovery for holders of the Company’s equity interests.”
Cineworld expects to emerge from the Chapter 11 cases in the first half of 2023.
“Although any sale transaction resulting from the Marketing Process, among other things, may delay emergence beyond the first half of 2023, the Group remains committed to emerging from the Chapter 11 Cases as expeditiously as possible,” the company added.
Shares of Cineworld plunged 24% on Monday following the announcement and are down 40% year to date.
