Cineworld Group is considering a voluntary Chapter 11 filing in the US as it seeks to cut its $5 billion (€4.99 billion) debt pile, the world’s second-largest cinema operator said in a filing on Monday.
Its cinemas remain open, the company said. Cineworld operates a 17-screen cinema on Dublin’s Parnell Street and has a cinema in Belfast. On Friday its shares plunged more than 80 per cent after reports that the firm was to file for bankruptcy within weeks.
The British cinema chain said it is in discussions with many of its big stakeholders, including its secured lenders, over options, which could also include obtaining additional liquidity. Centerbridge Partners, Eaton Vance, Invesco and State Street are among Cineworld’s creditors.
Cinema operators have been struggling to bounce back from the pandemic, with a weak release schedule and rising competition from online streaming services. On August 17th Cineworld surprised investors with an announcement that it was looking to restructure its balance sheet, in a move that will “likely result in a very significant dilution of existing equity interests”.
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Another UK group, Vue Cinemas, is seeking to restructure its debt in court and transfer ownership from a pool of Canadian pension funds to its lenders.
Cineworld amassed a heavy debt load after buying US rival Regal in 2017. Its adjusted earnings before interest, tax, amortisation and depreciation were just $455 million in the last financial year, its latest annual report showed. It also faces nearly $1 billion in damages to Canada’s Cineplex over a takeover bid that was aborted in 2020.
Chapter 11 bankruptcy allows a company to continue operating while it works out a plan to repay creditors. The company is also considering “ancillary proceedings in other jurisdictions”, Cineworld said. — Bloomberg
