Cineworld has halted its sale plans after arranging a debt-for-equity funding deal with lenders.
The global cinema chain, which has 751 venues worldwide and 103 in the UK, has struck a deal with lenders controlling 83% of its more than $5bn (£4bn) debt.
The restructuring support agreement and a backstop commitment agreement will allow it to emerge from Chapter 11 bankruptcy protection.
The plan will reduce the group’s level of debt by approximately $4.53bn, with its ‘legacy lenders’ receiving equity in the reorganised group in exchange for the release of their claims under the legacy facilities.
It will also allow Cineworld to raise $800m through a $400m fully backstopped equity offering to the lenders and a $400m direct equity offering to some of them. It will pay a backstop fee of 20%.
The deal will leave Cineworld with $1.46bn in new debt financing, subject to a 7% fee, upon the group’s emergence from Chapter 11.
The proceeds of the rights offering and the exit facility will be used to repay in full the approximately $1.94bn debtor-in-possession financing facility entered into by the group when it went into Chapter 11. It will also fund business operations going forward.
The proposed restructuring does not provide for any recovery for holders of Cineworld’s existing equity interests.
Cineworld chief executive Mooky Greidinger said: “This agreement with our lenders represents a vote of confidence in our business and significantly advances Cineworld towards achieving its long-term strategy in a changing entertainment environment.
“With a growing slate of blockbusters and audiences returning to cinemas in increasing numbers, Cineworld is poised to continue offering moviegoers the most immersive cinema experiences and maintain its position as the ‘Best Place to Watch a Movie’.”
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