Regal Parent Cineworld files for bankruptcy

Regal Parent Cineworld files for bankruptcy

The shoe finally fell today as giant cinema chain Cineworld filed for Chapter 11. The bankruptcy includes a $1.94 billion funding facility from existing lenders to make things work.

Cineworld plans to exit Chapter 11 in the first quarter of 2023 and will in the meantime pursue “a strategy of optimizing real estate in the United States”, i.e. closings or sales of cinemas, while ” engaging in collaborative discussions with American owners to improve American cinema”. rental conditions. »

Cineworld “believes that a comprehensive financial restructuring is in the best interests of the Group and its stakeholders, taken as a whole, over the long term,” the company said. “Cineworld looks forward to working with its creditors and stakeholders to advance the Group’s efforts to restructure its balance sheet.”

The heavily indebted parent company of Regal Cinemas has filed in the US Bankruptcy Court for the Southern District of Texas. Cineworld had signaled its distress last month and said action being considered included voluntary bankruptcy.

Here is what he said today:

“Cineworld Group plc and its subsidiaries…, a leading cinema operator in 10 countries including the US and UK, with 747 locations and 9,139 screens worldwide, 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 matters, Cineworld, with the expected support of its secured lenders, will seek to implement a deleveraging operation that will significantly reduce the Group’s indebtedness, strengthen its balance sheet and provide the financial strength and flexibility needed to accelerate, and capitalize on Cineworld’s strategy in the cinema industry. The group’s Chapter 11 companies are entering Chapter 11 business with commitments for a debtor-in-possession financing facility of approximately $1.94 billion from existing lenders, which will help ensure that Cineworld’s operations are continuing in the normal course as Cineworld implements its reorganization.

Specifically, Cineworld plans to operate its global operations and theaters – including Regal, Cinema City, Picture House and Planet – as usual without disruption during the process and honor customer membership programs including Regal Unlimited and Regal Crown Club in the US and Cineworld Unlimited in the UK.

The company noted that any deleveraging will result in a very significant dilution of existing stakes – that is, shareholders – “and there is no guarantee of recovery for holders of existing stakes.” It does not expect the Chapter 11 filing to result in a suspension of trading in its shares on the London Stock Exchange.

A draft reorganization plan will be filed “in due course”.

“The pandemic has been an incredibly challenging time for our business, with the forced closure of theaters and a huge disruption to movie schedules that has gotten us to this point,” CEO Mookie Greidinger said. “This latest process is part of our ongoing efforts to strengthen our financial position and targets a deleveraging that will create a more resilient capital structure and an efficient business. This will allow us to continue executing our strategy to reinvent the most immersive cinematic experiences. for our customers with the latest and most advanced screen formats and enhancements to our flagship cinemas. Our goal remains to further accelerate our strategy so that we can strengthen our position as the “best place to watch a movie” .

With movie theaters closed for months, the exhibition has been among the industries hardest hit by the pandemic. And a string of tentpoles that buoyed attendance earlier this year at the box office ended on a soft slate for August and September.

The most indebted exhibitors were the hardest hit. Cineworld took on significant debt when it acquired Regal in 2018 for $3.6 billion. Although the chain has made progress in reimbursing it, it has not entered Covid on good financial footing. It carries a debt of approximately $5 billion. Separately, a Canadian judge ruled late last year that the company was liable for more than $1 billion in damages for backing out of a deal to buy Cineplex.

Another channel, Vue International, is also being restructured. AMC Entertainment survived the bankruptcy largely due to its bizarre genesis in a meme stock, which inflated its stock price and led to a series of beneficial transactions. Consolidation is seen as inevitable for an over-selected US, especially as smaller chains start to run out of Covid relief funds.

Cineworld plans to operate its global operations and theaters – including Regal, Cinema City, Picture House and Planet – as usual without disruption during the process and honor customer membership programs including Regal Unlimited and Regal Crown Club in the US and Cineworld Unlimited in the UK.


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