REG - Cineworld Group plc - Commencement of Chapter 11 Cases

CineworldAnnouncement

07/09/2022 15:45

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RNS Number : 6625Y  Cineworld Group plc  07 September 2022

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

Cineworld Group plc ("Cineworld")

 

Cineworld Commences Chapter 11 Cases with approximately $1.94 billion in
Debtor-in-Possession Financing Commitments to Facilitate a Significant
De-Leveraging Transaction and Position Company for Long-Term Growth

 

Chapter 11 restructuring process expected to significantly reduce debt and
strengthen Cineworld's balance sheet and liquidity position

 

De-leveraging transaction will allow Cineworld to accelerate, and capitalise
on, its strategy in the cinema industry

 

Chapter 11 restructuring process involves entities that are engaged in
Cineworld's US, UK and Jersey businesses; businesses in all other territories
remain unaffected

 

Group cinemas remain open globally to guests and members; operations to
continue without interruption

 

7 September 2022-LONDON-Cineworld Group plc and its subsidiaries (the "Group")
(LSE: CINE), a leading cinema operator in 10 countries including the United
States and the United Kingdom with 747 sites and 9,139 screens globally, today
announced that Cineworld and certain of its subsidiaries (collectively, the
"Group Chapter 11 Companies") have commenced Chapter 11 cases in the United
States Bankruptcy Court for the Southern District of Texas (the "Court").

 

As part of the Chapter 11 cases, Cineworld, with the expected support of its
secured lenders, will seek to implement a de-leveraging transaction that will
significantly reduce the Group's debt, strengthen its balance sheet and
provide the financial strength and flexibility to accelerate, and capitalise
on, Cineworld's strategy in the cinema industry. The Group Chapter 11
Companies enter the Chapter 11 cases with commitments for an approximate $1.94
billion debtor-in-possession financing facility from existing lenders, which
will help ensure Cineworld's operations continue in the ordinary course while
Cineworld implements its reorganisation.

 

As previously announced, it is expected that any de-leveraging transaction
will result in very significant dilution of existing equity interests in the
Group and there is no guarantee of any recovery for holders of existing equity
interests. The Company does not expect the Chapter 11 filing to result in a
suspension of trading in its shares on the London Stock Exchange.

 

The Group Chapter 11 Companies expect to file a proposed plan of
reorganisation (the "Plan") with the Court in due course and to meet the
necessary requirements to emerge from Chapter 11 as expeditiously as possible.
Cineworld currently anticipates emerging from Chapter 11 during the first
quarter of 2023 and is confident that a comprehensive financial restructuring
is in the best interests of the Group and its stakeholders, taken as a whole,
in the long term. Cineworld looks forward to working with its creditors and
stakeholders to advance the Group's efforts to restructure its balance sheet.

 

As part of its restructuring process, Cineworld expects to pursue a real
estate optimisation strategy in the US and intends to engage in collaborative
discussions with US landlords to improve US cinema lease terms in an effort to
further position the Group for long-term growth.

 

Chapter 11 is a court-supervised process that will provide a forum for
efficient reorganisation of the Group's business and balance sheet. The Group
Chapter 11 Companies will remain in possession and control of their assets,
existing management and the board of directors will stay in control of the
business and the Group's operations will be allowed to continue uninterrupted.

 

Upon filing for relief under Chapter 11, the Group Chapter 11 Companies
benefit from an "automatic stay" against any action to litigate or collect a
pre-petition claim. Cineworld expects to operate its global business and
cinemas as usual throughout this process.

 

Cineworld's subsidiaries and affiliates not engaged in the US, UK or Jersey
businesses were not included in the filing and are not part of the Chapter 11
process.

 

Mooky Greidinger, Chief Executive Officer of Cineworld, said: "We have an
incredible team across Cineworld laser focused on evolving our business to
thrive during the comeback of the cinema industry. The pandemic was an
incredibly difficult time for our business, with the enforced closure of
cinemas and huge disruption to film schedules that has led us to this point.
This latest process is part of our ongoing efforts to strengthen our financial
position and is in pursuit of a de-leveraging that will create a more
resilient capital structure and effective business. This will allow us to
continue to execute our strategy to reimagine the most immersive cinema
experiences for our guests through the latest and most cutting-edge screen
formats and enhancements to our flagship theatres. Our goal remains to further
accelerate our strategy so we can grow our position as the 'Best Place to
Watch a Movie'."

 

BUSINESS AS USUAL

During the restructuring process, Cineworld expects to operate its global
business and cinemas as usual without interruption. In conjunction with the
filing of the Chapter 11 cases, the Group Chapter 11 Companies have filed
certain customary "first day" motions to obtain the requisite court authority
for the Group to continue operating its businesses in the ordinary course
without disruption to its customers, vendors, suppliers or employees as much
as practicable. The Group Chapter 11 Companies intend to pay all vendors and
suppliers in full and on normal terms for valid amounts for goods and services
received during the Chapter 11 process. In addition, the Group expects that
employees will continue to receive their usual wages and benefits without
interruption.

 

Cineworld has secured commitments for an approximate $1.94 billion
debtor-in-possession ("DIP") financing facility provided by certain existing
lenders, which will be used to, among other things, fund the Group's
operations and refinance certain prepetition funded indebtedness. Subject to
Court approval, the DIP financing, together with the Group's available cash
reserves and cash provided by operations, is expected to provide sufficient
liquidity for Cineworld to meet its ongoing obligations, including
post-petition obligations to vendors and suppliers, as well as employee wages,
salaries and benefits programs.

Cineworld and its brands around the world - including Regal, Cinema City,
Picture House and yes Planet - are continuing to welcome customers to cinemas
as usual, which will not change during the Chapter 11 cases. The Group expects
to continue to honour the terms of all existing customer membership programs,
including Regal Unlimited and Regal Crown Club in the United States and
Cineworld Unlimited in the UK.

Mooky Greidinger added: "I am deeply grateful for the continued support of our
stakeholders throughout this process and beyond, including our dedicated team
members, loyal guests and members. We look forward to continuing to provide
guests and members with the best cinematic experiences for years to come. The
outstanding success of recent blockbusters such as Spider-Man: No Way Home; No
Time to Die; Top Gun: Maverick; Dune; Minions: The Rise of Gru; Thor: Love and
Thunder and others proves clearly that people love to go to the movies and
that, once supply of product returns, our business will reap the benefits."

 

ADDITIONAL INFORMATION REGARDING THE RESTRUCTURING PROCESS

Given the international nature of the Group's business, certain aspects of the
de-leveraging transaction to be pursued in the Chapter 11 cases may require
ancillary implementation proceedings beyond the Chapter 11 cases. No final
decision has been taken in relation to whether any such ancillary
implementation proceedings are to be pursued in this case, and any final
decision will be subject to a number of factors, nor has a decision been taken
on the timing of any such process. However, the possible ancillary
implementation proceeding that may be used by the Group in this case could
include, among other things, a restructuring plan or a scheme of arrangement
under Part 26A or Part 26 (respectively) of the UK Companies Act 2006, or
other ancillary proceedings in the UK or other key jurisdictions alongside the
Chapter 11 cases in order to achieve the objectives of the restructuring. A
further update on this point will be provided in due course.

 

The lenders providing the DIP financing have also agreed to provide funding
through the DIP financing for the purchase by a newly incorporated Group
company of the outstanding commitments under the Rest of World facility (being
the facility advanced to fund the Group's operations in Poland, Romania,
Hungary, the Czech Republic, Bulgaria, Slovakia and Israel). This debt
transfer is expected to occur in the near term, following which the newly
incorporated Group company will be the sole lender under the Rest of World
facility. It is expected that the terms of the Rest of World facility will be
further amended at such point. In order to facilitate implementation of this
arrangement, the existing lenders under the Rest of World facility have agreed
to forbear temporarily in exercising certain of their rights triggered by the
Chapter 11 filings. As a result of these arrangements, the Rest of World group
entities will not commence Chapter 11 cases or any equivalent local
proceedings at this time. A further update will be provided in due course.

 

Additional information on the Chapter 11 cases (including copies of all
documents filed in the Chapter 11 cases) can be found at
https://cases.ra.kroll.com/cineworld.

 

PJT Partners LP is providing financial advice, Kirkland & Ellis LLP and
Slaughter and May are acting as legal counsel and AlixPartners LLP is serving
as restructuring advisor to Cineworld. A further announcement will be made
when appropriate.

 

The person responsible for arranging the release of this announcement is Scott
Brooker, Company Secretary.

 

Contacts:

Cineworld Group plc:

Israel Greidinger

Nisan Cohen

Manuela Van Dessel

+44 (0)20 8987 5000

investors@cineworld.co.uk

 

FGS Global (UK):

James Leviton / James Thompson / Ed Treadwell

+44 (0)20 7251 3801

CineworldMedia@fgsglobal.com

 

FGS Global (US):

Kal Goldberg / Lizzie Hyland / Monique Sidhom

+1 (646) 970-4727

CineworldMedia@fgsglobal.com

 

About Cineworld

Cineworld Group plc 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 in May 2007.
Currently, Cineworld Group plc is the only quoted UK cinema business.
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 UK, Ireland, Poland, the Czech Republic, Slovakia,
Hungary, Bulgaria, Romania, Israel and the US.

 

Important information

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.

 

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.  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.

 

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 (the "Advisers") are providing advice to Cineworld (and other members of
its 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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