Giant theater chain Cineworld will convene a meeting of its shareholders on April 20 related to the Chapter 11 process currently underway in a Texas bankruptcy court.
The meeting, which is in-person only, is required by UK securities law, Cineworld said today, “in circumstances where the value of the company’s net assets is less than half of its called up share capital” – officially constituting a “serious loss of capital.”
The purpose — “allowing shareholders to consider whether any, and if so what, steps should be taken to deal with the situation.”
That said, there isn’t much stockholders can actually do beyond “consider” as they’re set to be wiped out, something the company acknowledged, saying, “It is not expected that any plan of reorganisation or sale transaction would result in any recovery for Cineworld’s shareholders.”
The Board “is calling the General Meeting to ensure that this matter is addressed as required by the Act. The Board welcomes dialogue with the Company’s shareholders, and the General Meeting will provide a forum for such discussions to take place, but no resolutions will be proposed at the General Meeting,” Cineworld said in a filing.
The Brentford (West London) gathering is set for 10 am local time.
Highly-indebted Cineworld filed for bankruptcy last fall with its coffers almost empty amid a slow box office recovery, which has since picked up steam. The company, its debt holders and creditors are hashing out a restructuring plan to present to Judge Marvin Isgur of U.S. Bankruptcy Court, Southern District of Texas.
A marketing process to sell the company is still proceeding on a separate, simultaneous track for assets including Regal in the U.S.; Cineworld and Picturehouse in the UK and Ireland; and “rest of world”— or cinemas in Central and Eastern Europe, and Israel.
An attorney for the company said at a hearing last month it had preliminary offers for “rest-of-world” assets and some interest from strategic buyers for the entire company. Nothing as of that time just for Regal. Also, “We did not receive any all-cash bids, and no bid came anywhere near the $6 billion of secured indebtedness that exists on the company’s balance sheet today,” Cineworld lawyer Joshua Sussberg said at the Feb. 21 hearing. He said final bids were due April 10.
Cineworld, choked by hefty rent obligations, is using the Chapter 11 process in part to try to close some theaters, including a few big Regal locations, and extricate itself from other contracts.
At the hearing, the parties also discussed a tentative May 30 date to vote on the still-to-be-presented restructuring plan, but these things are fluid and can take longer than anticipated.