UPDATED, 07:30 a.m.: Cineworld Group has officially entered administration, following an application at the High Court in London. The administration order applies only to Cineworld Group and not to any of its operating companies or subsidiaries such as Regal Cinemas in the U.S. or Picturehouse Cinemas in the UK.
Following last week’s announcement, Cineworld also will officially cease trading on the London Stock Exchange from tomorrow (Aug 1) at 8 am BST.
“As previously announced by Cineworld, the restructuring of the Group, which will be implemented by way of the administration process, will transform the Group’s balance sheet and provide it with significant additional liquidity to fund its long-term strategy,” the company said in a statement today.
The group has said it continues to operate its global business and cinemas — including Regal, Cinema City, Picturehouse, and Planet — as usual without interruption.
PREVIOUS STORY, JUNE 26: Cineworld said on Monday that as part of its proposed restructuring following Chapter 11, it expects to file for administration of its listed entity Cineworld plc in the UK but that its operating companies will continue business as usual without interruption.
Administration in the UK is an insolvency process, similar to a bankruptcy process. The world’s second biggest cinema chain, which owns Regal in the U.S., filed for bankruptcy protection in the U.S. in September, with proceedings in the Southern District of Texas ongoing. It is expected to emerge from Chapter 11 in the first half of July in the U.S.
The UK administration application would only apply to Cineworld Group plc itself (as the listed parent company of the group) and not to any of the operating companies or subsidiaries under it. Any administration order would not affect the status or rights of any of the group’s employees and operations will be unaffected by the process.
The proposed restructuring, when implemented, will transform the group’s balance sheet and provide it with significant additional liquidity to fund its long-term strategy. In particular, it will involve the release of approximately $4.53 billion of the group’s funded indebtedness, the execution of a rights offering to raise gross proceeds of $800 million and the provision of $1.46 billion in new debt financing.
Given the level of existing debt that is expected to be released under the plan, the proposed restructuring does not provide for any recovery for holders of Cineworld’s existing equity interests.
Cineworld Group also said Monday that after an application to the UK’s Financial Conduct Authority, it is expected that the listing of its shares will be suspended shortly following any decision by the Board to make an application to appoint administrators, currently expected to take place in July. Cineworld further said that it expects to cancel its London listing and share trading at 8:00am on the business day following the actual appointment of administrators.
Once administrators have been appointed, they will take steps through which substantially all of Cineworld Group plc’s assets will be transferred to its wholly owned subsidiary, Crown UK Holdco Limited. A newly incorporated company to be controlled by the group’s lenders will become the sole owner of Crown, with Cineworld Group plc ceasing to have any interest in Crown or the rest of the group. Although the restructuring plan is intended to allow the business of the group to emerge from the Chapter 11 cases as a continued going concern, it will not achieve a rescue of Cineworld Group plc itself.
Cineworld continues to operate its global business and cinemas as usual and this will not be affected by the entry of Cineworld Group plc into administration. The group and its brands – including Regal, Cinema City, Picturehouse and Planet – are continuing to welcome customers, and the terms of all existing membership programs continue to be honored, including Regal Unlimited and Regal Crown Club in the U.S. and Cineworld Unlimited in the UK.
As Deadline reported earlier this month, executives of Cineworld, led by CEO Mooky Greidinger, have agreed to a payout in the $30 million range, in the event that they leave leave the company as it prepares to exit Chapter 11.