Cineworld, Owner of Regal Cinemas, Will File for Chapter 11 Bankruptcy — Report
The second-largest film exhibitor in the world, Cineworld, is expected to file for bankruptcy.
Per the Wall Street Journal, Cineworld, the owner of Regal Cinemas, has met with lawyers from Kirkland & Ellis LLP and consultants from AlixPartners to advise on the bankruptcy process. Cineworld is expected to file a Chapter 11 petition in the U.S. and is considering filing for insolvency in the U.K.
Since the rise of streaming and the start of the COVID-19 pandemic, Cineworld has been open about low admission rates affecting business. The company issued a statement revealing “active discussions with various stakeholders and [that the company] is evaluating various strategic options to both obtain additional liquidity and potentially restructure its balance sheet through a comprehensive deleveraging transaction.”
The statement continued that the petition is “due to a limited film slate that is anticipated to continue until November 2022 and [is] expected to negatively impact trading and the group’s liquidity position in the near term. Any deleveraging transaction will likely result in very significant dilution of existing equity interests in Cineworld.”
Cineworld reportedly carried a net debt of approximately $5 billion by the end of 2021 after securing $200 million of incremental loans in July 2021. The Hollywood Reporter reported Cineworld had “agreed to covenant amendments on certain of its existing debt facilities, including reducing the minimum liquidity requirement and relaxing limitations on the use of cash,” last summer.
Since the WSJ report, Cineworld stocks have dropped more than 81 percent to a record low (via Reuters). Cineworld operates in 10 countries and could be facing payment obligations to former Regal Cinemas shareholders and a potential multimillion-dollar fine in a dispute with Canada’s Cineplex.
More to come…