Beleaguered multinational cinema operator, Cineworld says that has halted its attempt to sell off its businesses outside the U.S., U.K. and Ireland. This appears to mean that the group will remain intact as it seeks a pathway out of the U.S. Chapter 11 bankruptcy strictures.
“The group received proposals for the [rest of the world] business from a number of prospective counterparties, however the proposals did not meet the value level required by the group’s lenders,” Cineworld said in a statement on Tuesday.
Cineworld owns the Regal cinema chain in the U.S. and is the second largest movie theater operator in the world. Its ‘rest of the world’ operations include cinemas in Poland, the Czech Republic, Slovakia, Hungary, Bulgaria, Romania and Israel.
Earlier this month, Cineworld confirmed that it had formally filed a plan of reorganization with the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division and that it aims to exit Chapter 11 during the first half of 2023.
In March, before the formal filing, it was reported that talks about selling Regal and the U.K. and Ireland businesses had also collapsed.
Cineworld says that its proposal to the court is “supported by lenders holding and controlling approximately 83% of the group’s term loans due 2025 and 2026 and revolving credit facility due 2023 and approximately 69% of the debtors’ outstanding indebtedness under the debtor-in-possession financing facility.”
The debt-for-equity swap will effectively wipe out Cineworld’s existing shareholders. “In light of the level of existing debt that is proposed to be released under the plan, the proposed restructuring does not provide for any recovery for holders of Cineworld’s existing equity interests,” the company repeated.
The company’s shares are listed in the U.K. The share price was volatile on Tuesday morning following the news. At £0.0091 apiece, the group has a market capitalization of some GBP11.5 million ($14 million).
– More to follow.