Cineworld has made a deal with its lenders to restructure its debt and emerge from bankruptcy and has also dropped plans to sell its businesses in the US, UK and Ireland.
In a statement released today (April 3), Cineworld unveiled a conditional restructuring deal with lenders that would see the exhibition giant emerge from the Chapter 11 bankruptcy process if approved.
The proposed agreement would reduce the company’s indebtedness by around $4.53bn, principally through lenders receiving equity in the reorganised group in exchange for the release of their claims.
The deal will also raise $800m through a fully backstopped equity offering to all lenders and a direct equity offering to specific lenders.
It will also provide $1.46bn in new debt financing to the Cineworld Group when it emerges from Chapter 11.
The proceeds of the rights offering and exit facility will be used to repay in full the $1.94bn debtor-in-possession financing facility entered into by the group Chapter 11 companies, and fund future business operations.
“The proposed restructuring does not provide for any recovery for holders of Cineworld’s existing equity interests,” the statement said.
It added that the agreement is subject to the “execution of definitive documentation and certain other conditions”.
Cineworld chief executive officer Mooky Greidinger said: “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. 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’.”
Potential sale
Cineworld also updated on a potential sale of all or part of the group. Back in February the company reported “multiple indicative bids” for all or some of its assets and “some strategic interest” in the whole business.
However, Cineworld has now said that “absent an all-cash bid significantly in excess of the value established under the proposed restructuring”, the group would stop seeking a buyer for its businesses in the US, the UK and Ireland, but will “continue to consider the proposals that were received in respect of its ‘rest of the world’ business.”
As previously announced, Cineworld expects to emerge from the Chapter 11 process during the first half of 2023.
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