(LONDON) British cinema group Cineworld on Monday announced plans to raise $2.26 billion to reduce its debt and emerge from bankruptcy proceedings in the United States, but confirmed that its shareholders could face huge losses.
The group has entered into a “conditional agreement” with its biggest creditors, who will “acquire shares in the restructured group” in return for debt reduction. […] approximately $4.53 billion,” Cineworld said in a statement.
Cineworld, which has $8.8 billion in debt as of June 2022, will receive $2.26 billion in new funding, including $800 million through an equity issue and the rest through new debt.
Cineworld hopes to emerge from bankruptcy proceedings in the US in the “first half of the year”. But the plan announced on Monday still needs to be properly vetted by several lenders, and particularly by US courts.
Additionally, Cineworld notes that “the proposed restructuring will not provide any kind of recovery” to existing shareholders, which has already warned shareholders of severe losses on several occasions.
The result: Its title was down 31.03% to 2 pence on the London Stock Exchange by 5:10 a.m. (Eastern Time). It has lost 90% of its value in the past year.
Cineworld, which filed for bankruptcy in the US in early September, has struggled to recover from the COVID-19 pandemic and extended theater closures.
Since then, Cineworld has been in discussions with its key shareholders to put a restructuring plan in place, but has also gone through the process of selling the group in parallel. He inherited all or part of the company’s plans.
Cineworld said on Monday it would hold back from divesting its US, UK and Ireland businesses if the value of the restructuring plan “significantly exceeds” but remains open to selling its operations in other parts of the world.
The group has assured that its operations will continue uninterrupted during its restructuring.
The group manages more than 9,000 screens at 751 sites in 10 countries, notably under the Cineworld and Picturehouse brands in the United Kingdom and Ireland, and Regal Cinemas in the US.
In addition to the devastating impact of the pandemic, it suffered from a frenzy of acquisitions that led to the accumulation of mountains of debt, most notably the purchase of American chain Regal.
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