Cineworld to file for administration in UK as part of restructuring

Reuters

Published Jun 26, 2023 07:14

Updated Jun 26, 2023 22:11

(Reuters) -Embattled cinema chain operator Cineworld Group (LON:CINE) on Monday said it will file for administration in Britain and suspend trading on the London Stock Exchange next month, as part of a restructuring plan to reduce its massive debt.

Shares in the world's second-largest movie theatre chain operator, which filed for U.S. bankruptcy protection in September, slumped 26% to 0.52 pence in morning trade.

The company had disclosed a net debt of about $8.8 billion, according to its latest results at the time.

The British company said administrators, once appointed, would shift all of its assets to a wholly owned subsidiary called Crown, and a newly incorporated company controlled by the group's lenders will become the sole owner of Crown, with Cineworld ceasing to have any interest in the parties.

Its London-listed shares will also be suspended as a result.

The proposed restructuring will involve the release of about $4.53 billion of the group's debt, a rights offering to raise gross proceeds of $800 million and the provision of $1.46 billion in new debt financing, Cineworld said.

The owner of Regal in the United States and Picturehouse, Planet and Cinema City across Europe had scrapped plans to sell some or all of its businesses after failing to find a buyer.

It opted for a restructuring plan that effectively wipes out existing shareholders' equity.

Hit hard by the COVID-19 pandemic that shuttered cinemas and halted releases of blockbluster films, Cineworld also faced increased competition from streaming services.

The company continues to expect to emerge from Chapter 11 bankruptcy protection in July, having said in May that its proposed debt restructuring had the backing of most of its lenders.