The company announced Wednesday that the indebted Cineworld Group and its subsidiaries had filed Chapter 11 claims with the United States Bankruptcy Court in Texas.
The company, which owns Regal Cinemas in the U.S., said in a statement that as part of the Chapter 11 cases, Cineworld would seek leverage transactions that will significantly reduce the Group’s debt, strengthen its balance sheet, and give it financial strength to accelerate and capitalize on Cineworld’s strategy in the film industry.
The Group Chapter 11 Companies enter the Chapter 11 cases with promises for an approximate $1.94 billion debtor-in-possession financing arrangement from current lenders, which will help guarantee Cineworld’s operations continue in the regular course while the company undertakes its reorganization.
In an effort to better position the company for long-term growth, Cineworld will pursue a real estate optimization strategy in the U.S.U.S. and plans to collaborate with U.S.U.S. landlords to optimize U.S.U.S. theater lease terms. It further stated that it anticipated continuing to operate its global operations and movie theaters without interruption.
It is anticipated that any deleveraging deal will cause a very significant dilution of the Group’s existing equity interests, the business stated in August, and there is no assurance that holders of existing stock interests will receive any compensation. The business also stated that it does not anticipate that its shares will no longer be traded on the London Stock Exchange as a result of the Chapter 11 petition.
Cineworld stated that it expects to emerge from Chapter 11 during the first quarter of 2023 and is certain that a thorough financial reorganization is in the long-term best interests of the company and its stakeholders.
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For the year ending December 31, 2021, the firm reported a loss before tax of $708.3 million, a significant improvement from the $3 billion loss in 2020. However, the Group’s net debt, excluding lease liabilities, rose from $4.33 billion to $4.84 billion, an increase of $492.7 million. In addition, Cineworld obtained $200 million in extra liquidity through incremental loans in July 2021.
The “amazing staff” at Cineworld, according to CEO Mooky Greidinger, is laser-focused on transforming the company to prosper during the cinema industry’s recovery. He acknowledged how extremely challenging the epidemic was for the industry, particularly the forced shutdown of theaters and the severe interruption to film schedules that brought Cineworld to where it is now.
With 747 locations and 9,139 screens worldwide, Cineworld operates in 10 nations, including the U.S.U.S. and the U.KU.K.
The largest shareholder in Cineworld exits
Weeks after the troubled company acknowledged it would declare bankruptcy in the U.S.U.S., Cineworld’s largest independent stakeholder sold practically all of its remaining stock.
Previously rumored as a potential purchaser for the chain, Jangho Group is run by elusive Chinese businessman Liu Zaiwang.
In recent days, it has drastically reduced its stake from 11.6% to 1.6%.
The action will dash any hopes that Zaiwang could attempt to take over the struggling company.
The Greidinger brothers, Mooky and Israel, are in charge of Cineworld. After amassing enormous debts before the pandemic and being forced to close its movie theater complexes for extended periods, the couple have brought Cineworld dangerously close to bankruptcy.
Additionally, a failed acquisition attempt to acquire Canadian rival Cineplex cost it £800 million in legal fees.
It acknowledged last month that it needs additional money and is thinking about a significant financial reorganization to survive.
Zaiwang became a shareholder in August 2020. He was the second largest investor prior to the stock sale. He is now in the sixth position.