UK-based global theater chain and parent of Regal Cinemas said overnight it expects to emerge from Chapter 11 in July.
The news comes as nearly 100% of its legacy lenders agreed to an amended and restated restructuring agreement and backstop that have been months in the making. There had been some holdouts. The giant exhibitor filed for Chapter 11 last September in U.S. Bankruptcy Court in the South District of Texas.
The proposed restructuring “now has the support of lenders holding and controlling approximately 99% of the Legacy Facilities and at least 69% of the outstanding indebtedness under the debtor-in-possession facility of Cineworld and certain of its subsidiaries,” the company said in an announcement.
The court approved the terms and told the parties to move ahead.
As previously announced, given the magnitude of Cineworld’s debt, the plan doesn’t provide any recovery for shareholders – who will left holding the bag as the stock price dwindled to near nothing and will now likely be delisted.
The company ran a sale process too, entertaining bids for all or part of its assets, but said the few offers that came in were much too low relative to its debt. After a major expansion of its circuit, including buying Regal for $4 billion in 2017, Cineworld’s debt stood at about $8.8 billion when it filed for Chapter 11. Its financial situation then became untenable as the global pandemic shuttered theaters and box office was slow to recover.
The group remains committed to emerging from Chapter 11 “as expeditiously as possible” and expects that will be in July.
Meanwhile, it said, “Cineworld continues to operate its global business and cinemas as usual without interruption” at brands Regal, Cinema City, Picturehouse and Planet. “The Group continues to honour the terms of all existing customer membership programmes, including Regal Unlimited and Regal Crown Club in the United States and Cineworld Unlimited in the UK.”
Cineworld/Regal has sold or closed some theaters. Bankruptcy has allowed it to renegotiate terms with landlords or exit leases. What it ends up with will be easier to see after the dust settles for the newly restructured company. There could also be management changes. The giant chain has been run by longtime CEO Mooky Greidenger, whose grandfather founded the company.