August 22, 2022
In response to media speculation, Cineworld, owner of No. 2 U.S. theatrical operator Regal Cinemas, Aug. 22 said it is evaluating strategic options to both obtain additional liquidity and potentially restructure its balance sheet through a “comprehensive deleveraging transaction” that includes a possible voluntary Chapter 11 filing in the U.S. and associated ancillary proceedings in other jurisdictions as part of an orderly implementation process.
In the meantime, U.K.-based Cineworld and Regal theaters globally remain open for business as usual. Cineworld, which acquired Knoxville, Tenn.-based Regal in 2018 for $3.6 billion, operated 7,200 screens across 549 theaters, employing more than 26,000 people prior to the pandemic. The COVID-19 health emergency forced the chain, along with the theatrical market, to shutter all theaters. Regal has struggled to regain its fiscal footing ever since.
Cineworld said it is in discussions with many of its major stakeholders, including its secured lenders and their legal and financial advisers about a fiscal re-organization filing that would allow it access near-term liquidity and support the orderly implementation of a fully funded deleveraging transaction. Cineworld would expect to maintain its operations in the ordinary course until and following any filing and ultimately to continue its business over the longer term with no significant impact upon its employees.
As previously announced, any deleveraging transaction would, however, result in very significant dilution of existing equity interests in Cineworld. The company said any further announcements would be made if and when appropriate.
Wall Street isn’t waiting. Shares of Cineworld and rival AMC Theatres, the world’s No. 1 theatrical distributor, plummeted in early Aug. 22 trading. Cineworld’s stock is down 23% and AMC shares down more than 30%.