Beleaguered multinational cinema operator, Cineworld says that it anticipates exiting the U.S.’s Chapter 11 bankruptcy system in the first half of this year.
The company revealed Tuesday that it has now formally filed a plan of reorganization with the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division.
Cineworld owns the Regal cinema chain and is the second largest movie theater operator in the world. Its shares are listed in the U.K.
In a filing, Cineworld said that its proposal to the court is “supported by lenders holding and controlling approximately 83% of the group’s term loans due 2025 and 2026 and revolving credit facility due 2023 and approximately 69% of the debtors’ outstanding indebtedness under the debtor-in-possession financing facility [previously agreed with the court].”
The plan filed is in line with the April 2 agreement that it struck with creditors.
If implemented, the proposed restructuring would be expected to reduce by $4.53 billion the indebtedness of the group’s subsidiaries that are subject to the U.S.’s Chapter 11 strictures. It would do this principally by a debt-for-equity swap, with the lenders accepting shares in exchange for relinquishing their claims.
However, the proposed restructuring does not provide any relief or recovery for holders of Cineworld’s existing equity interests, the company repeated on Tuesday. Existing equity holders will see their holdings diluted by the issue of new shares to the debt-holders.
The group said that it is “seeking to confirm the plan on an expeditious timeline” and reiterated its expectation that it can emerge from the Chapter 11 bankruptcy strictures “during the first half of 2023.” The plan is subject to court approval and Cineworld acknowledges that court approval depends on certain creditor approvals.
The company also proposed that, along with the ongoing Chapter 11 cases, it will change its accounting reference date and financial year end from Dec. 31 to June 30, effective for the 2022 financial year.
Cineworld Group and its subsidiaries had commenced Chapter 11 cases in the United States Bankruptcy Court in September 2022.
Cineworld said that it is “[continuing] to operate its global business and cinemas as usual without interruption. Cineworld and its brands around the world – including Regal, Cinema City, Picture House and Planet – are continuing to welcome customers to cinemas as usual. The group continues to honor the terms of all existing customer membership programs, including Regal Unlimited and Regal Crown Club in the U.S. and Cineworld Unlimited in the U.K.
The announcement was made before the start of Tuesday equity trading in London. At the previous close the company’s shares stood at £1.75 apiece, down from a 2023 high of £5.20 seen in February.
