(Bloomberg)—Cineworld Group Plc filed for bankruptcy in Texas in an effort to tame its $5 billion debt pile.
The UK-based movie theater chain, which draws most of its revenues from the US after the acquisition of Regal Cinemas in 2018, filed for Chapter 11 protection on Wednesday. Chapter 11 bankruptcy allows a company to continue operating while it works out a plan to repay creditors.
Cineworld has commitments for $1.94 billion of bankruptcy financing lined up from existing secured lenders, the company said in a statement. The company’s management and board of directors will remain in control of the business.
The company expects to “significantly” slash its debt load with the support of its lenders in Chapter 11, according to the statement. It’s also planning to renegotiate its leases with US landlords and “pursue a real estate optimization strategy,” it said. Cineworld is the second-largest movie theater chain, with more than 9,000 screens across 747 locations.
In August, 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.”
Centerbridge Partners, Eaton Vance, Invesco Ltd. and State Street Corp. are among Cineworld’s largest creditors.
Cinema operators have been struggling to recover from the Covid-19 slump amid a weak release schedule and stronger competition from online streaming platforms. Another UK group, Vue Cinemas, has just restructured its debt and transferred ownership from a pool of Canadian pension funds to its lenders.
Cineworld amassed a heavy debt load after buying Regal. Its adjusted earnings before interest, tax, depreciation and amortization were just $455 million in the last financial year, according to its latest annual report.
It also faces nearly $1 billion in damages to Canada’s Cineplex Inc. over a takeover bid that was aborted in 2020. It plans to complete its Chapter 11 proceedings in the first quarter of 2023.
--With assistance from Michael B. Marois.
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