Regal Cinemas’ Parent Announces Agreement With Lenders to Emerge From Chapter 11 Bankruptcy, Wall Street Not Impressed

Cineworld, the bankrupt British-based corporate parent to Regal Cinemas, April 3 announced it has entered into a restructuring agreement with lenders controlling about 83% of the company’s fiscal loans due in2025 and 2026 and revolving credit facility due this year.

The agreement, if accepted by a judge, would reduce the exhibitor’s debt by $4.53 billion, raise $800 million through a backstopped equity offering, and provide $1.46 billion in new debt financing.

In light of the level of existing debt that is expected to be forgiven under the restructuring plan, Cineworld said the new agreement with lenders does not provide for any recovery for the company’s shareholders. The received $1.94 billion debtor-in-possession fiscal support from lenders to maintain operations after filing Chapter 11 bankruptcy last September.

Cineworld is the No. 2 theatrical distributor, operating in 10 countries, including the U.S. and the U.K. with 747 sites and 9,139 screens globally.

“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,” CEO Mooky Greidinger said in a statement. “With a growing slate of movie blockbusters and moviegoers returning to cinemas in increasing numbers, Cineworld is poised to continue offering the most immersive cinema experiences.”

While Greidinger may think Cineworld received a vote of confidence, Wall Street has other ideas. The company’s stock opened April 3 down almost 32%.

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Bankrupt Regal Cinemas’ Owner Says Fiscal Recovery Remains Below Pre-Pandemic Levels

Cineworld, the bankrupt U.K.-based owner/operator of Regal Cinemas in the U.S., Sept. 30 disclosed that its fiscal return remains challenged. The operator of more than 9,000 screens across 10 countries said that while monthly ticket sales have progressively recovered through June 30, topping 82 million, they remained below both pre-pandemic levels and the company’s original forecast for 2022.

Cineworld generated just 14 million ticket sales in the previous-year period. Revenue topped $1.5 billion, up from $293 million in 2021. The chain generated 136 million ticket sales in the first six months of 2019, including $2.15 billion in revenue.

This has been a challenging period for Cineworld due to the unprecedented impact of the COVID-19 pandemic on our business and its lagging and continuing disruption to film schedules,” CEO Mooky Greidinger said in a statement. 

Greidinger said the box office successes of Top Gun: Maverick; Doctor Strange in the Multiverse of Madness; Jurassic World Dominion and The Batman underscore consumer demand for “special” cinematic experiences.

The executive said that despite encouraging signs among moviegoers and a strong slate of movies later this year, Cineworld’s Chapter 11 restructuring process in the U.S. should provide the financial strength and flexibility to strengthen its balance sheet and liquidity position. 

“We strongly believe that our customers have missed the big-screen experience and the social event of watching a movie with others,” Greidinger said. “The upcoming winter film slate, including but certainly not limited to Black Panther: Wakanda Forever and Avatar: The Way of Water, gives us confidence that trading will improve from its current levels. This will be assisted by our clear focus on growth and the dedication of our team.”

Regal Cinemas Owner Files for Chapter 11 Bankruptcy Protection

Regal Cinemas owner Cineworld Group Sept. 7 announced it had filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the Southern District of Texas. Cineworld is the No. 2 theatrical distributor, operating in 10 countries, including the U.S. and the U.K. with 747 sites and 9,139 screens globally.

Through the filing, Cineworld, with expected $1.94 billion debtor-in-possession fiscal support of its secured lenders, will seek to implement a de-leveraging transaction that could significantly reduce its debt, strengthen its balance sheet and provide the financial flexibility to accelerate ongoing operations.

Regal will continue business as normal during the bankruptcy proceeding, with the intention of paying all vendors and suppliers in full and on normal terms for valid amounts for goods and services received during the Chapter 11 process. In addition, Cineworld expects that employees will continue to receive their usual wages and benefits without interruption.

It is expected that any de-leveraging transaction will result in very significant dilution of existing equity interests in Cineworld and there is no guarantee of any recovery for holders of existing equity interests. The company does not expect the filing to result in a suspension of trading in its shares on the London Stock Exchange.

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Cineworld anticipates emerging from Chapter 11 during the first quarter of 2023 and contends a comprehensive financial restructuring is in the best interests of the company and stakeholders in the long term. As part of its restructuring process, Cineworld expects to engage in collaborative discussions with U.S. landlords to improve its theater lease terms.

“The pandemic was an incredibly difficult time for our business, with the enforced closure of cinemas and huge disruption to film schedules that has led us to this point,” CEO Mooky Greidinger said in a statement.

Greidinger said the filing would allow the company to restructure theatrical operations, including rolling out cutting-edge screen formats and enhancements to existing “flagship” theaters.

“Our goal remains to further accelerate our strategy so we can grow our position as the ‘best place to watch a movie,’” he said.

Regal Cinemas Corporate Owner Confirms It Is Considering Bankruptcy

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%.

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WSJ: Regal Cinemas Parent Cineworld to File for Bankruptcy

Cineworld, the U.K.-based parent of No. 2 theatrical operator Regal Cinemas, is reportedly looking to file for bankruptcy as it struggles to emerge from the post-pandemic shutdown and ongoing industry challenges.

The Wall Street Journal, which first reported the move citing sources, said the chain has retained attorneys and consultants familiar with the bankruptcy process, and that the filings are expected soon in the U.S. and the U.K.

Cineworld, which acquired Regal in 2018 for $3.6 billion, earlier this week reported underwhelming financial results, including lower-than-expected ticket sales.

“Despite a gradual recovery of demand since re-opening in April 2021, recent admission levels have been below expectations,” Cineworld said in an Aug. 18 statement.

The chain said that reduced ticket sales projections going forward are due to a limited film release slate that is anticipated to continue through November.

“[This is] expected to negatively impact trading and the group’s liquidity position in the near term,” the company said.

Knoxville, Tenn.-based Regal operated 7,200 screens across 549 theaters, employing more than 26,000 people through 2019. Unlike rival AMC Theatres, which managed to secure more than $3.3 billion in post-pandemic funding, Regal almost filed for bankruptcy during the height of the Covid-19 theater closures in 2020 after shuttering all screens.

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Regal Cinemas Owner Upbeat on October Box Office, Moviegoer Trends

Cineworld, corporate parent of Regal Cinemas, the second-largest movie theater operator in the U.S., Nov. 15 disclosed that October box office revenue approached 90% of pre-pandemic levels in 2019. The U.K.-based company did not release full quarterly results.

CEO Mooky Greidinger, in a media statement, said movies such as MGM’s latest James Bond actioner, No Time to Die, along with Sony Pictures’ Venom: Let There Be Carnage, Warner Bros.’ Dune, and Disney/Marvel’s Black Widow and Shang-Chi and the Legend of the Ten Rings, contributed to a 127% uptick in October revenue compared with 2019.

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“We are thrilled to see audiences returning in significant numbers,” Greidinger said. “Our partnerships with the studios are as strong as ever and with the incredible movie slate to come, there are real grounds for optimism in our industry.”

The executive said the winter box office portends ongoing improvement in the exhibition business as moviegoers return to the big screen, especially in the United States, where Regal has revamped theaters to include luxury seating and enhanced safety protocols. This comes after Regal largely shuttered operations during much of the pandemic.

The company was able to secure $400 million in new long-term debt, in addition to getting $203 million in U.S. government pandemic relief funds. Cineworld shuttered 12 underperforming theaters, while securing rental relief from many landlords.

“These new [revamped] cinemas clearly support our strategy to enhance the cinema experience for all our customers,” Greidinger said. “I am really proud of the extraordinary efforts that everybody in the business has made to manage this company during an unprecedented time. Whilst there are challenges ahead, I believe these efforts have positioned us for great success in the future.”

The near future could see increased challenges, according to main rival AMC Theatres, whose CEO Adam Aron warned last week that pending colder temperatures and arrival of the flu season could impact the exhibition business.

“We wish to emphasize that no one should have any illusions that there is not more challenge ahead of us still to be met,” Aron said. “The virus continues to be with us, we need to sell more tickets in future quarters than we did in the most recent quarter.”

The executive’s comments came just days after he cashed out $25 million worth of stock options as part of an expedited personal estate plan.

Regal Cinemas Owner Posts $209 Million Operating Loss in First Half of Year

Cineworld Group, corporate parent of Regal Cinemas and owner of more than 9,000 theatrical screens worldwide, Aug. 12 disclosed an operating loss of $209 million through the first six months of the fiscal year. That compared with a first-half loss of $1.34 billion in 2020, during the height of the pandemic.

The chain anticipates a strong fourth quarter supported by a robust film slate and pent-up demand for affordable out-of-home entertainment, subject to the COVID-19 situation, according to CEO Mooky Greidinger.

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“Despite the challenges, the actions we have taken have ensured that Cineworld has emerged a more focused business with significant liquidity and a clear vision for the future,” Greidinger said in a statement. “Cineworld is in the position it is today thanks to the great dedication and commitment of the Cineworld team around the world, and I sincerely thank each and every member of the team for their loyalty and contribution.”

With few new studio releases during the pandemic, Regal effectively ceased operations for much of 2020 and into 2021, with Cineworld cutting more than 45,000 jobs worldwide.

“We are like a kind of a grocery shop that [has] no food to sell,” Greidinger said last October.

Regal Parent, Disney Reportedly Agree to Theatrical Window Deal

On the heels of its theatrical distribution deal with Universal Pictures, Cineworld, corporate parent of No. 2 exhibitor Regal, reportedly has ironed out an agreement with the Walt Disney Co. That would be Cineworld’s third distribution deal in the COVID-19 era when including a previous agreement with Warner Bros. Pictures.

The Disney deal is expected to mirror Universal’s, which affords the studio expedited access to direct-to-consumer distribution, i.e. premium VOD, depending on a film’s box office. If a movie generates $50 million or less in ticket sales, the studio has the right to release it digitally within 17 days of theatrical debut. If the box office exceeds $50 million, the exhibitor’s window expands to 31 days — 45 days in the United Kingdom.

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While Disney’s upcoming movies Cruella, Luca, Black Widow and Jungle Cruise all have either hybrid Premier Access/theatrical or Disney+ distribution, the media giant is debuting 20th Century Studios’ Free Guy and Marvel Studios’ action-adventure Shang-Chi and the Legend of the Ten Rings with 45-day exclusive windows on Aug. 13 and Sept. 3, respectively.

Regal Owner, Universal Pictures Ink Shortened Theatrical Window Pact

Cineworld, corporate parent of No. 2 exhibitor Regal Cinemas, May 13 signed a shortened theatrical window deal with Universal Pictures that affords the exhibitor a share of revenue from premium VOD distribution.

The pact is similar to Universal’s deal with AMC Theatres and Cinemark that grants the exhibitor exclusive 17-day screening of movies. If the title generates less than $50 million at the box office, Universal can offer it into homes for a $19.99 digital rental (PVOD). If the box office exceeds $50 million, the theatrical window is extended to 31 days.

Regal has a separate agreement with Warner Bros., affording the exhibitor a 45-day window beginning with the studio’s 2022 theatrical slate.

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Regal Re-Opening in April, Signs 45-Day Window With Warner Beginning in 2022

Cineworld Group, corporate parent of No. 2 exhibitor Regal Cinemas, March 23 announced that its screens would re-open in April — the first time in six months. The phased re-opening will kick off with a limited number of cinemas opening April 2 for Godzilla vs. Kong and going wider on April 16 with Mortal Kombat. Cineworld also plans to re-open in the United Kingdom, its second biggest market, in May, in line with current government guidance.

“We have long awaited this moment when we can welcome audiences back to our Regal theaters and restore our essential role within the communities we serve,” CEO Mooky Greidinger said in a statement. “We continue to take all the necessary precautions and abide by our CinemaSafe guidelines to confidently provide a safe and comfortable experience. With capacity restrictions expanding to 50% or more across most U.S. states, we will be able to operate profitably in our biggest markets. We will also be monitoring developments closely in the U.K. and across Europe as we set to gradually reopen across the world in line with local government guidance.”

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In addition, Cineworld reached a multiyear agreement under which films from Warner Bros. Pictures will be exhibited at Regal screens in the United States when they open, in addition to streaming on HBO Max. The exhibitor will allow for Warner’s concurrent theatrical/Max distribution for the remainder of 2021. Beginning next year, Warner theatrical releases will have a 45-day window of theatrical exclusivity, with certain provisions.

As for the United Kingdom, Warner and Cineworld agreed to an exclusive theatrical window of 31 days prior to PVOD, and an extended window of 45 days for films that open to an agreed upon box-office threshold.

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By comparison, AMC Theatres struck deals with Warner and Universal Pictures adhering to WarnerMedia’s concurrent Max release strategy, while affording Universal a 17-day window with revenue-sharing on select titles based on box office.

“This agreement shows the studio’s commitment to the theatrical business, and we see this as an important milestone in our 100-year relationship with Warner Bros.,” Greidinger said, adding that the U.S. market represents 75% of Cineworld’s business.

“We are great believers in the theatrical experience, which only a year ago [2019] generated $43 billion in revenue worldwide,” he said.