Report: Regal Owner Cineworld Prepares for Chapter 11 Bankruptcy Filing in U.S.
Cineworld Group, the owner of Regal Cinemas, is preparing to file for Chapter 11 bankruptcy protection in the U.S., the Wall Street Journal reported on Friday.
Executives at Cineworld in a statement to THR said Cineworld and Regal theaters remain open for business as usual. And they reiterated an Aug. 17 statement that indicated the company was eyeing unspecified strategic options as it was struggling to get through the summer doldrums for Hollywood tentpoles in its theaters.
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“As we announced earlier this week, we are proactively evaluating strategic options to ensure we have the balance sheet strength and flexibility to adapt to market conditions, and that process remains ongoing. We are committed to our customers’ experience and to being the ‘Best Place to Watch a Movie,'” Cineworld added.
Bankruptcy protection would offer the debt-laden exhibitor a way to maintain operations, while securing capital needed to continue recovering box office revenue coming out of the COVID pandemic.
The Journal said Cineworld had hired the legal firm Kirkland & Ellis LLP and consultants from AlixPartners to help prepare the bankruptcy protection filing. Cineworld is expected to start a chapter 11 proceeding in the U.S. and is considering an insolvency process in the U.K., the report said.
On Wednesday, Cineworld had said its admission levels had fallen below its expectations. They were “due to a limited film slate that is anticipated to continue until November 2022 and are expected to negatively impact trading and the group’s liquidity position in the near term,” it added.
“Any deleveraging transaction will likely result in very significant dilution of existing equity interests in Cineworld,” the second-largest exhibitor also noted.
After a strong box office recovery in the first half of 2022, major exhibitors are looking to momentum possibly stalling in the second half of the year for a lack of big name Hollywood tentpoles after the performance of Top Gun: Maverick and Minions: The Rise of Gru.
Cineworld has had a high debt load for years. Like many rival exhibitors, it has had a particularly challenging time dealing with its debt mountain coming out of the coronavirus pandemic. It has had a need for fresh capital to maintain operations.
Its net debt stood at around $5 billion as of the end of 2021. In July 2021, the company secured $200 million of incremental loans from a group of its existing lenders and 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.
Aug. 19 14:30 p.m. Updated with a statement from Cineworld on its current business conditions.
