(Reuters) -Movie chain operator Cineworld Plc said on Friday a U.S. bankruptcy court had granted it access to up to $785 million of an about $1.94 billion financial aid it had secured from existing lenders as part of its Chapter 11 filing.
Cineworld, the world's second-largest cinema chain operator, filed for Chapter 11 bankruptcy protection on Wednesday with less than $4 million in cash on hand. The Chapter 11 filing involves Cineworld's U.S., UK and Jersey operations, covering the bulk of its business.
U.S. bankruptcy judge Marvin Isgur in Houston allowed Cineworld to borrow $514 million to fund day-to-day operations and $271 million to buy back the debts owed by its subsidiaries in Poland, Czech Republic, Slovakia, Hungary, Romania, Bulgaria, Ireland, and Israel.
Bankruptcy laws in those countries are less debtor-friendly than U.S. laws, said Steve Zelin of PJT Partners, which acts as Cineworld's investment banker.
Buying the susidiaries' debt would ensure that foreign lenders do not take steps to remove the subsidiaries' management or liquidate their assets, Zelin told Isgur at a Thursday court hearing.
Isgur forced CineWorld to back off a request to borrow $1 billion and immediately use it to repay debts incurred in 2020 and 2021, when it was struggling to survive the COVID-19 pandemic that shuttered theaters for months at a time.
Cineworld will seek approval of that $1 billion loan, plus an additional $150 million earmarked for day-to-day operations, at a future court hearing.
Shares of Cineworld were up 9% at 4.51 pence following the announcement.
The Regal Cinemas parent, which operates more than 9,000 screens across 10 countries and employs around 28,000 people, took on debt to fund part of its $3.6 billion purchase of Regal in 2017, and more to survive the pandemic.