Cineworld/Regal Cinemas
Cineworld
Regal owner Cineworld has entered into a restructuring support agreement and a backstop commitment agreement with lenders that will, if approved, see it emerge from bankruptcy.
The exhibition giant also noted today that it has received non-binding proposals for some or all of the group’s assets but determined that absent an all-cash bid significantly in excess of the value established under the proposed restructuring, it will cease seeking a buyer for its businesses in the U.S., UK and Ireland. The chain will continue to consider the proposals received for its “rest of world” business. A process is underway with the bidders for those holdings to assess whether an acceptable sale transaction can be completed.
If the proposed restructuring is implemented, it is expected to reduce the group chapter 11 companies’ funded indebtedness by approximately $4.53 billion, principally through lenders under the legacy facilities 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 so-called “Legacy Lenders” and a direct equity offering to certain of them. The restructuring would further provide $1.46 billion in new debt financing to the group chapter 11 companies upon their emergence from the chapter 11 cases.
The proceeds of the rights offering and the exit facility will be used to, among other things: repay in full the approximately $1.94 billion debtor-in-possession financing facility entered into by the group chapter 11 companies and fund costs associated with the the process and go-forward business operations.
Cineworld CEO Mooky Greidinger called the restructuring agreement “a vote of confidence in our business” which “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’.”
Consistent with the Company’s announcement on February 24, in light of the level of existing debt that is expected to be released under the plan, the proposed restructuring does not provide for any recovery for holders of Cineworld’s existing equity interests.
Cineworld said it expects to emerge from the chapter 11 cases during the first half of 2023, but any sale transaction, among other things, may delay that. The group said it remains committed to emerging from the cases “as expeditiously as possible.” The plan still needs to be approved by the requisite threshold of the chapter 11 companies as well as the United States Bankruptcy Court for the Southern District of Texas.
Cineworld filed for bankruptcy last fall in that court. It has allowed Regal to shutter theaters and renegotiate leases with landlords. Last week, Judge Marvin Isgur said he was sticking with an April 20 date to go over the plan and set May 26 as a confirmation date.
The lenders in question hold and control approximately 83% of the embattled company’s term loans due in 2025 and 2026, and a revolving credit facility due 2023.
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