Cineworld has said it is “business as usual” across the world’s second-largest chain of movie theatres after being granted access to a first tranche of financing in bankruptcy protection proceedings in the US.
The London-listed group has taken relief under Chapter 11 proceedings, a court-supervised process that gives companies time to negotiate with creditors to reach a settlement on the reduction of debts. Cineworld has warned that these proceedings will likely lead to “very significant” dilution of existing shareholders, with no guarantee of any recovery for holders of equity interests.
Chief executive Mooky Greidinger said the company expects to pursue a “real estate optimisation strategy” in the US, and will enter into talks with existing US landlords in a bid to improve its lease terms. In the meantime operations across the global business covering 751 cinemas – including more than 500 in the US and more than 100 in Britain and Ireland – will continue “as usual without interruption”.
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“The pandemic was an incredibly difficult time for our business, with the enforced closure of cinemas and huge disruption to film schedules that has led us to this point,” Mr Greidinger said. “This latest process is part of our ongoing efforts to strengthen our financial position and is in pursuit a de-leveraging that will create a more resilient capital structure and effective business.”
The company hopes to emerge from bankruptcy in the first quarter of next year, and says it has $1.94 billion (£1.67bn) in financing from existing lenders to help it through. It has received approval to immediately access up to $785 million of this financing.
Shares in Cineworld have plunged since the end of August when the group confirmed it was considering financial restructuring. The company has struggled to service debts accrued from its 2018 acquisition of the Regal chain in the US as audience figures failed to rebound strongly following the easing of Covid restrictions.
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