Cineworld gets US court approval to raise $2.26 bln after bankruptcy
02/05/2023 22:44
By Dietrich Knauth
May 2 (Reuters) - Bankrupt movie theater chain Cineworld
CINE.L received U.S. court approval on Tuesday to raise $2.26
billion as part of its exit from bankruptcy, after reaching a
settlement with a minority faction of lenders that had opposed
parts of the exit financing.
Cineworld is aiming to emerge from Chapter 11 bankruptcy in
the first half of 2023, with a proposal to cut $4.53 billion in
debt, wipe out existing shareholders and transfer ownership of
the company to its lenders.
U.S. Bankruptcy Judge Marvin Isgur at a hearing in Houston
approved Cineworld's plan to fund its post-bankruptcy operations
with a new $1.46 billion loan and the sale of $800 million in
new equity shares. Cineworld is scheduled to seek final court
approval of its bankruptcy restructuring on June 12.
Isgur approved the financing after Cineworld announced a
last-minute settlement that resolved objections raised by
minority lenders including Jefferies Leveraged Credit, Glendon
Capital Management and Greywolf Capital.
"I came out here not knowing whether we were going to have a
fight or a deal," Isgur said.
The settlement resolved a dispute over the amount of new
stock that Cineworld's lenders would receive for backstopping
the exit financing.
Under Cineworld's earlier proposal, a majority faction of
lenders, which includes Blackstone Alternative Credit Advisors,
Carlyle Investment Management and Sixth Street Partners, would
have received 27% of the company's new equity shares simply for
agreeing to support the exit financing package that they
themselves engineered, according to the objecting lenders.
The settlement reduces the backstop premium to 11% of the
new equity shares, providing the minority lenders with about
$38.5 million in additional value, Cineworld attorney Joshua
Sussberg said in court. The new agreement is now supported by
over 99% of Cineworld's lenders, Sussberg added.
Cineworld filed for U.S. bankruptcy protection in September
to try to restructure its debt. It attributed its financial
troubles to the lingering impacts of the COVID-19 pandemic,
which halted production of major blockbusters, forced theaters
to temporarily close, and shifted consumer habits toward
watching movies via online streaming platforms. It initially
sought to sell some or all of its business, but pivoted to a
debt restructuring plan after failing to find a buyer.
(Reporting by Dietrich Knauth, Editing by Alexia Garamfalvi and
David Gregorio)
((Dietrich.Knauth@thomsonreuters.com;))