As had been forecast over the last three weeks, Cineworld Group officially filed for Chapter 11 bankruptcy protection on Wednesday, 7 September in the United States. The world’s second largest exhibitor plans to continue operating its 9,139 screens across 10 countries as they attempt to “implement a de-leveraging transaction” which will reduce its debt and restructure its finances. This transaction will undoubtedly dilute current equity holders as well.
We’ve already learned a lot about Cineworld through the filing itself and the company’s first day motions in court. Apparently the movie theatre chain had USD $5.16 billion in debt as of June, not counting rent liabilities. Though Cineworld had secured USD $1.94 billion in additional loans from existing lenders to operate during Chapter 11, the judge handling the case sent lawyers back to the drawing board when he found out that most of the money would be used to pay down debt rather than for day-to-day business operations. According to Cineworld’s own lawyers, the exhibitor had only USD $4 million in cash to operate at the time of filing.
Look for Cineworld to renegotiate a majority of its leases in the United States, where it operates Regal. The company signaled it will likely abandon some sites as well as part of any reorganization plan. Cineworld hopes to be out of bankruptcy by the end of the first quarter 2023. We’ll be publishing analysis and more details on Celluloid Junkie as they become available.