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REG - Cineworld Group plc - Chapter 11 Update

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RNS Number : 0478V  Cineworld Group plc  03 April 2023

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CINEWORLD GROUP PLC
("Cineworld" or the "Company")

Chapter 11 Update

Cineworld Announces Conditional Agreement With Lenders To Emerge From Chapter
11 With Strong Financial Platform To Deliver Long-Term Strategy

Cineworld (together with its subsidiaries, the "Group") today announces that
it and certain of its subsidiaries (together, the "Group Chapter 11
Companies") have entered into a restructuring support agreement (the "RSA")
and a backstop commitment agreement (the "BCA") with lenders holding and
controlling approximately 83% of the Group's term loans due 2025 and 2026 and
revolving credit facility due 2023 (together, the "Legacy Facilities").

The lenders party to the RSA and the BCA have agreed, subject to the execution
of definitive documentation and certain other conditions as described below,
to support a proposed restructuring of the Group Chapter 11 Companies (the
"Proposed Restructuring"), including a commitment to: (i) provide a first lien
exit financing facility; and (ii) backstop an equity rights offering in
connection with the Proposed Restructuring.  The intention is for the
Proposed Restructuring to be implemented primarily through a plan of
reorganisation (the "Plan") in the Chapter 11 cases of the Group Chapter 11
Companies (the "Chapter 11 Cases").

Consistent with the Company's announcement on 24 February 2023, in light of
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.

Mooky Greidinger, Chief Executive Officer of Cineworld, said: "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.  With a growing slate of blockbusters and
audiences returning to cinemas in increasing numbers, Cineworld is poised to
continue offering moviegoers the most immersive cinema experiences and
maintain its position as the 'Best Place to Watch a Movie'."

Proposed Restructuring

If implemented, the Proposed Restructuring is expected to:

·      reduce the Group Chapter 11 Companies' funded indebtedness by
approximately $4.53 billion, principally through lenders under the Legacy
Facilities (the "Legacy Lenders") receiving equity in the reorganised Group in
exchange for the release of their claims under the Legacy Facilities;

·      raise $800 million in aggregate gross proceeds, through a fully
backstopped equity offering to the Legacy Lenders (the "Backstopped Rights
Offering") and a direct equity offering to certain Legacy Lenders (the "Direct
Allocation Offering" and, together with the Backstopped Rights Offering, the
"Rights Offering"); and

·      provide $1.46 billion (net of original issue discount) in new
debt financing (the "Exit Facility") to the Group Chapter 11 Companies upon
their emergence from the Chapter 11 Cases.

The proceeds of the Rights Offering and the Exit Facility will be used to,
among other things: (i) repay in full the approximately $1.94 billion
debtor-in-possession financing facility entered into by the Group Chapter 11
Companies when they commenced their Chapter 11 Cases; (ii) fund the costs
associated with the Group Chapter 11 Companies' emergence from the Chapter 11
Cases; and (iii) fund their go-forward business operations.

The Proposed Restructuring does not provide any recovery for holders of
Cineworld's existing equity interests.

Completion of the Proposed Restructuring is subject to a number of conditions
as set out in the RSA and the BCA (the "Conditions"), including, among other
things: (i) approval of the Plan by the requisite thresholds of the Group
Chapter 11 Companies' creditors (being, in broad terms, at least one half of
the Legacy Lenders and those holding two thirds of the claims outstanding
under the Legacy Facilities); (ii) confirmation of the Plan by the United
States Bankruptcy Court for the Southern District of Texas (the "Bankruptcy
Court"); (iii) execution of ancillary implementation proceedings; (iv) entry
into, and filing of, the definitive documents required to implement the
Proposed Restructuring; and (v) the Group's entry into a revolving credit
facility of up to $200 million (which is subject to certain approval rights of
the Legacy Lenders that have signed the RSA (the "RSA Parties") and the Equity
Capital Raising Parties (as defined below)).  The RSA Parties have committed,
subject to the terms of the RSA, to vote in favour of the Plan and support the
Proposed Restructuring.

A summary of the key terms of the Rights Offering and the Exit Facility, as
well as the expected treatment of certain stakeholders under the Proposed
Restructuring, is provided below and is not exhaustive of all the terms of the
RSA and BCA.  Further detail will be provided in the Plan and an accompanying
disclosure statement (the "Disclosure Statement"), both of which will be
consistent in all material respects with the RSA and the BCA and filed in due
course with the Bankruptcy Court.

Rights Offering

Through the Backstopped Rights Offering, the Legacy Lenders are expected to be
offered, pro rata to their holdings under the Legacy Facilities (and subject
to meeting certain eligibility criteria), the right to purchase shares in the
reorganised Group in an aggregate purchase amount of $400 million. The
Backstopped Rights Offering will, subject to the Conditions, be fully
backstopped by certain Legacy Lenders (the "Equity Capital Raising Parties").

In connection with backstopping the Rights Offering, the Equity Capital
Raising Parties will: (i) agree, subject to the Conditions, to purchase shares
in the reorganised Group in an aggregate purchase amount of $400 million
through the Direct Allocation Offering; and (ii) be paid a backstop fee equal
to 20% of the issued share capital in the reorganised Group after giving
effect to the Proposed Restructuring, including the Rights Offering (the
"Equity Backstop Fee").

Under the terms of the BCA, the price payable to subscribe for shares under
the Rights Offering will be set at a 25% discount to an implied equity value
of the Group after giving effect to the Proposed Restructuring of $1.48
billion. The BCA does not provide for the holders of Cineworld's existing
equity interests and other securities to participate in the Rights Offering
unless those holders are also Legacy Lenders and, as outlined above, the
Proposed Restructuring does not provide for any recovery for holders of
Cineworld's existing equity interests.

Exit Facility

A sub-set of the Legacy Lenders (the "Exit Facility Commitment Parties") will
commit, subject to the Conditions, to provide the Group with a new first lien
facility of $1.46 billion (net of any original issue discount).

Under the terms of the BCA, the Group will be required to run a third-party
marketing process to raise a facility of equivalent size on alternative terms
(subject to certain approval rights of the RSA Parties and the Equity Capital
Raising Parties), with the Exit Facility being provided, subject to the
Conditions, by the Exit Facility Commitment Parties if it is not possible to
obtain such a facility. In connection with backstopping the Exit Facility, the
Exit Facility Commitment Parties will receive a backstop fee equal to 7% of
the issued share capital in the reorganised Group after giving effect to the
Proposed Restructuring, including the Rights Offering (the "Debt Backstop
Fee").

Expected treatment of creditors under the Proposed Restructuring

Under the terms of the Proposed Restructuring, the Legacy Lenders are expected
to receive, in consideration for their claims under the Legacy Facilities and
subject to the Conditions: (i) 100% of the equity in the reorganised Group,
subject to dilution from the Rights Offering, the Equity Backstop Fee and the
Debt Backstop Fee (and any equity reserved for a management incentive plan);
and (ii) the right to participate in the Backstopped Rights Offering, subject
to meeting certain eligibility criteria.

Subject to the Conditions, a settlement has also been reached with the holders
of general unsecured claims against each of the Group Chapter 11 Companies.

Marketing process

As announced on 3 January 2023, in parallel with developing a Plan, Cineworld
has also been running a marketing process in pursuit of a value-maximising
transaction for the Group's assets (the "Marketing Process").  As announced
on 24 February 2023, Cineworld received non-binding proposals for some or all
of the Group's assets from a number of potential transaction counterparties.

Having discussed with its key stakeholders, Cineworld has determined that,
absent an all-cash bid significantly in excess of the value established under
the Proposed Restructuring, the Marketing Process as it relates to the Group's
business in the US, the UK and Ireland will be terminated. Cineworld and its
key stakeholders continue to consider the proposals that were received in
respect of its 'Rest of the World' business (outside of the US, the UK and
Ireland) (the "RoW Business") and a process is underway with the bidders for
the RoW Business to assess whether an acceptable sale transaction can be
completed.  It is expected that the Plan will provide sufficient flexibility
to accommodate a sale of the RoW Business, assuming that the Marketing Process
leads to a sale transaction supported by the Group Chapter 11 Companies and
their stakeholders.  As previously announced, it is not expected that any
sale transaction would provide any recovery for holders of the Company's
equity interests.

Timing of emergence

As announced on 24 February 2023, Cineworld expects to emerge from the Chapter
11 Cases during the first half of 2023.  Although any sale transaction
resulting from the Marketing Process, among other things, may delay emergence
beyond the first half of 2023, the Group remains committed to emerging from
the Chapter 11 Cases as expeditiously as possible.

Business as usual

During the restructuring process, Cineworld continues to operate its global
business and cinemas as usual without interruption. Cineworld and its brands
around the world - including Regal, Cinema City, Picturehouse and Planet - are
continuing to welcome customers to cinemas as usual. The Group continues to
honour the terms of all existing customer membership programmes, including
Regal Unlimited and Regal Crown Club in the United States and Cineworld
Unlimited in the UK.

Accounting reference date

The Company also announces that, given the ongoing Chapter 11 Cases, it is
changing its accounting reference date and financial year end from 31 December
to 30 June, effective for the 2022 financial year.

Additional information

Information regarding the Chapter 11 Cases (including a copy of the RSA, with
a copy of the BCA as an exhibit thereto) is available at the following
website: https://cases.ra.kroll.com/cineworld. Once the Plan and the
Disclosure Statement are filed with the Bankruptcy Court, copies of those
documents will be made available on that website.

For further information please contact:

Cineworld Group plc:
Israel Greidinger

Nisan Cohen

Manuela Van Dessel

investors@cineworld.co.uk
+44 (0)20 8987 5000

FGS Global (UK) (Corporate PR Adviser):
James Leviton / James Thompson

Cineworld-LON@fgsglobal.com

+44 (0)20 7251 3801

FGS Global (US) (Corporate PR Adviser):
Kal Goldberg / Lizzie Hyland / Monique Sidhom

CineworldMedia@fgsglobal.com

+1 (646) 970-4727

PJT Partners LP (Financial Adviser):
Simon Lyons / Kush Nanjee

+44 (0)20 3650 1100

Steven Zelin / Michael Schlappig

+1 212 364 7800

About Cineworld

Cineworld was founded in 1995 and is now one of the leading cinema groups in
Europe. Originally a private company, it re-registered as a public company in
May 2006 and listed on the London Stock Exchange plc in May 2007.
 Cineworld's acquisition of Regal Entertainment Group has created the second
largest cinema business in the world (by number of screens). Cineworld
currently operates in the United Kingdom, Ireland, Poland, the Czech Republic,
Slovakia, Hungary, Bulgaria, Romania, Israel and the United States.

Forward looking statements

This announcement is not intended to and does not constitute and should not be
construed as, considered a part of, or relied on in connection with any
information or offering memorandum, security purchase agreement, or offer,
invitation or recommendation to underwrite, buy, subscribe for, otherwise
acquire, or sell any securities or other financial instruments or interests or
any other transaction, including with respect to the Rights Offering.

This announcement contains certain forward-looking statements with respect to
the financial condition, results of operations and business of the Group and
certain plans and objectives with respect thereto, including with respect to
the Group's ordinary shares.  These forward-looking statements can be
identified by the fact that they do not relate only to historical or current
facts. Forward-looking statements often use words such as "anticipate",
"target", "expect", "estimate", "intend", "plan", "goal", "believe", "hope",
"aims", "continue", "will", "may", "should", "would", "could", or other words
of similar meaning.  These statements are based on assumptions and
assessments made by the Group in light of their experience and their
perception of historical trends, current conditions, future developments and
other factors the Group believes appropriate. By their nature, forward-looking
statements involve risk and uncertainty, because they relate to events and
depend on circumstances that will occur in the future and the factors
described in the context of such forward-looking statements in this document
could cause actual results and developments to differ materially from those
expressed in or implied by such forward-looking statements.  Although it is
believed that the expectations reflected in such forward-looking statements
are reasonable, no assurance can be given that such expectations will prove to
have been correct and you are therefore cautioned not to place undue reliance
on these forward-looking statements which speak only as at the date of this
document.  The Group does not assume any obligation to update or correct the
information contained in this document (whether as a result of new
information, future events or otherwise), except as required by applicable
law.

There are several factors which could cause actual results to differ
materially from those expressed or implied in forward-looking statements.
 Among the factors that could cause actual results to differ materially from
those described in the forward-looking statements are changes in the global,
political, economic, business, competitive, market and regulatory forces,
future exchange and interest rates, changes in tax rates and future business
combinations or dispositions (including any potential sale by the Group) and
the risks, uncertainties and costs related to the Rights Offering, the Exit
Facility, and the Chapter 11 Cases, including, among others, the timing of any
emergence from the Chapter 11 Cases and the risk that any Plan may not be
confirmed or implemented at all.

Nothing in this announcement is intended as a profit forecast or estimate for
any period and no statement in this announcement should be interpreted to mean
that earnings, profit or earnings or profit per share or dividend per share
for the Group for the current or future financial years would necessarily
match or exceed the historical published earnings, profit or earnings or
profit per share or dividend per share for the Group.

PJT Partners LP, Alix Partners LLP, Kirkland & Ellis LLP and Slaughter and
May (collectively, the "Advisers") are providing advice to Cineworld (and
other members of the Group) and no one else in connection with the matters
referred to in this announcement.  The Advisers will not regard any other
person as their client in connection with such matters, nor will they be
responsible to any other person for providing the protections afforded to
their clients or for providing advice in relation to such matters.

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