Cineworld, the world’s second-biggest cinema chain, is expected to file for administration of its listed entity, Cineworld plc, in the UK as part of its proposed restructuring following Chapter 11 bankruptcy protection in the US. However, the company’s operating companies will continue business as usual without interruption, and the proposed restructuring will transform the group’s balance sheet and provide it with significant additional liquidity to fund its long-term strategy.
The UK administration application will only apply to Cineworld Group plc itself and not to any of its operating companies or subsidiaries under it. Thus, the status or rights of any of the group’s employees will remain unaffected by the process. The proposed restructuring involves the release of $4.53 billion of the group’s funded indebtedness, the execution of a rights offering to raise gross proceeds of $800 million, and the provision of $1.46 billion in new debt financing.
However, the proposed restructuring plan does not provide for any recovery for holders of Cineworld’s existing equity interests, given the level of existing debt that is expected to be released under the plan. Cineworld also expects to cancel its London listing and share trading at 8:00 am on the business day following the actual appointment of administrators.
Once administrators have been appointed, they will take steps through which substantially all of Cineworld Group plc’s assets will be transferred to its wholly owned subsidiary, Crown UK Holdco Limited. A newly incorporated company controlled by the group’s lenders will become the sole owner of Crown, with Cineworld Group plc ceasing to have any interest in Crown or the rest of the group.
Although the restructuring plan is intended to allow the business of the group to emerge from the Chapter 11 cases as a continued going concern, it will not achieve a rescue of Cineworld Group plc itself. Cineworld continues to operate its global business and cinemas as usual, and this will not be affected by the entry of Cineworld Group plc into administration. The group and its brands, including Regal, Cinema City, Picturehouse, and Planet, are continuing to welcome customers, and the terms of all existing membership programs continue to be honored, including Regal Unlimited and Regal Crown Club in the US and Cineworld Unlimited in the UK.
As Deadline reported earlier this month, executives of Cineworld, led by CEO Mooky Greidinger, have agreed to a payout in the $30 million range in the event that they leave the company as it prepares to exit Chapter 11.
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