Counsel for bankrupt Cineworld said today the Regal parent has received the outline of a restructuring plan from lenders, a blueprint that would take it out of bankruptcy, although it’s also still pursuing a possible sale of assets.
At a hearing at bankruptcy court in the Southern District of Texas, Cineworld attorney Joshua Sussberg said debt holders had submitted over the weekend a term sheet of a debt-for-equity exchange and a “significant” rights offering to fund the business going forward. He didn’t provide details of the plan, which has no specific financing commitments yet. A group of 35 funds holds a combined $6 billion in Cineworld debt.
Meanwhile, the company continues with a sale process and Sussberg said has signed multiple non-disclosure agreements with interested parties including financial and strategic buyers of “all shapes and sizes and with all different kinds of proposals.” Non-binding offers are due Feb. 16. “Our lenders are effectively a bidder and if they become a stalking horse for third parties, we would welcome that.”
A reviving box office led by Avatar: The Way of Water has helped boosted the company’s cash, which stood at $185 million at the end of Jan., he noted.
Cineworld filed for bankruptcy last fall after a prolonged slump in its business.
“It is not lost on the company that this lender group has stepped up multiple times to help in a time of need. That was because of Covid. And there were multiple financings. This will be yet another instance where the lenders will finance the company and finance its recovery. And it’s not lost on us that people have lost money. And it’s obvious, in situations like that, that fingers get pointed.” he said.
“I don’t intend to get into any specifics, but there have been narratives out there regarding our management team that are untrue,” Sussberg said. “Their knowledge runs deep and they are committed to helping facilitate this reorganization, doing whatever it takes and whatever is necessary.” Cineworld is led by Mooky Greidinger and was founded by his grandfather a century ago.
Mark Messersmith, speaking for the group of lenders, followed up on those comment later in the hearing: “Obviously, with a debt-for-equity transaction, the… leadership of the reorganized company is going to be very, very important to us. If the lenders become the owners of the company, which is our base case, we would anticipate that the board of directors of the restructured company would vet and chose a senior management team. There necessarily will be a transition if that’s the case and we anticipate working with the debtor and the existing management team about the terms of that transition if it is necessary.”
Both sides said they hope to present a fleshed out restructuring plan by the end of Feb.
As part of the Chapter 11, Cineworld has 150 “lease modifications” and 77 leases pending rejection if the cirucuit can’t come to terms with landlords, Sussman said. It is also looking to extricate itself from its long-term contract with in-cinema advertising partner National Cinemedia and strike a deal with another provider.