Regal Parent Cineworld declares bankruptcy

The shoe finally dropped today when the giant cineworld chain of theaters applied for Chapter 11.

Cineworld plans to apply for Chapter 11 in the first quarter of 2023 while implementing a “strategy to optimize US real estate” – that is, closing or selling cinemas – and “engaging in joint discussions with US owners.” United States Rental Conditions ”.

Cineworld “is convinced that a global financial restructuring is in the best interest of the group and its shareholders, as a whole, in the long term,” the company said. “Cineworld is looking forward to working with its creditors and stakeholders to further the group’s efforts to restructure its balance sheet.

Regal Cinemas’ heavily indebted parent filed for bankruptcy in the United States Bankruptcy Court for the Southern District of Texas. Cineworld announced its distress last month, stating that the measures it was considering included voluntary bankruptcy.

This is what he said today:

Cineworld Group plc and its subsidiaries …, a leading cinema operator in 10 countries, including the United States and the United Kingdom, with 747 sites and 9,139 screens worldwide, today announced that Cineworld and some of its subsidiaries (collectively, the “Chapter 11 Group Companies “) filed Chapter 11 cases in the United States Bankruptcy Court for the Southern District of Texas.

As part of the Chapter 11 case, Cineworld, with the anticipated support of its secured creditors, will seek to implement a deleveraging operation that will significantly reduce the group’s debt, strengthen its balance sheet and provide the financial strength and flexibility to accelerate. . and apply Cineworld’s strategy to the film industry. Group 11 companies are entering Chapter 11 cases and have approximately $ 1.94 billion in liabilities from existing creditors, ensuring the normal course of operations for Cineworld as Cineworld reorganizes.

Specifically, Cineworld plans to conduct its global operations and cinemas, including Regal, Cinema City, Picture House and Planet, as usual, without process interruption and honor Consumer membership programs including Regal Unlimited and Regal Crown Club in the US and Cineworld Unlimited in the UK.

The company noted that any deleveraging transaction would result in a very significant dilution of existing shares, ie shareholders, “and there is no guarantee of recovery for existing shareholders”. He does not expect the Chapter 11 filing to cause his shares to be suspended from trading on the London Stock Exchange.

A proposal for a reorganization plan will be presented “in due course”.

“The pandemic has been an incredibly difficult time for our business, with forced closures of cinemas and major movie interruptions, which have brought us to this point,” said CEO Mookie Greidinger. “This latest move is part of our continuing efforts to strengthen our financial position and promote deleveraging that will create a more resilient capital structure and an efficient business.” This will allow us to continue to implement our strategy to re-imagine the most immersive cinematic experience for our guests through the latest and most innovative screen formats and enhancements to our flagship cinemas. Our goal remains to further accelerate our strategy to grow our position as “the best place to see a movie”.

With theaters closed for months, the exhibition was among the industries most affected by the pandemic. And the poles that increased attendance earlier this year were reduced to a soft list in August and September.

Exhibitors with more debts hit. Cineworld took on significant debt to acquire Regal in 2018 for $ 3.6 billion. Although the chain has made some progress to pay for it, it hasn’t entered Covid on a solid financial footing. It has a debt of approximately $ 5,000 million. Separately, a Canadian judge late last year found the company liable for more than $ 1 billion in damages for forfeiting a deal to purchase Cineplex.

Another network, Vue International, is also undergoing restructuring. AMC Entertainment survived bankruptcy largely due to a bizarre meme boom that raised its share price and led to a number of profitable transactions. Consolidation is seen as inevitable for the overexposed US, especially as smaller chains run out of Covid relief funds.

Cineworld is looking forward to continuing its global business and cinemas including Regal, Cinema City, Picture House and Planet, as usual, with no process disruption and honor Consumer membership programs including Regal Unlimited and Regal Crown Club in the US and Cineworld Unlimited in the UK.

Cineworld is taking steps to position our company for the future. Our cinemas are open all over the world and we continue to receive guests as “the best place to see a movie”. More information: https://t.co/LeKH5WJZ95 pic.twitter.com/X8c9se20IT

– Cineworld (@cineworld) September 7, 2022