Theater advertiser National CineMedia files for bankruptcy protection (updated)

National CineMedia

12/04/2023 17:00

(Add shares and analyst comment; changes dateline)
       April 12 (Reuters) - National CineMedia LLC, the biggest
movie-theater advertising business in North America, filed for
Chapter 11 bankruptcy protection on Tuesday and said it had
entered into a restructuring agreement with its lenders.
    The announcement follows a similar move by British theater
chain Cineworld in September and underscores the challenges
facing the cinema industry, which is yet to bounce back from the
pandemic slump and a dearth of major film releases.
    Under the restructuring, NCM's secured lenders will convert
all its debt into equity; its listed holding company, National
CineMedia Inc  NCMI.O , will receive an ownership interest of
about 14% in the restructured entity.
        NCM filed for bankruptcy in the Southern District of
Texas, listing its estimated assets in the range of $500 million
to $1 billion, and liabilities between $1 billion and $10
billion.
  
    "(The) transactions will position us to deliver the strong
results our advertisers and cinema partners have come to expect
from us today and well into the future," Tom Lesinski, CEO of
National CineMedia Inc, said in a statement on Tuesday. 
    Shares of the holding company rose more than 60% to $0.33 on
Wednesday, having jumped 55% a day earlier after AMC
Entertainment Holdings Inc  AMC.N  disclosed it had acquired a
large stake, making it NCM's second-largest shareholder.
        NCM was the second most traded U.S. stock by retail
clients at 10:30 a.m. ET, according to J.P.Morgan data.
  
        Some analysts attributed the jump to the company's
upbeat prospects, given signs that audiences were finally
returning to theaters after a tough two years for the industry. 
  
    In its filing, NCM forecast revenue of $91.7 million for the
fourth quarter, a 44.4% increase; movie theater stocks have
rallied this week after the Super Mario Bros movie marked the
biggest opening weekend worldwide for a film release this year. 
    "Despite a difficult advertising environment and a
still-recovering box office, NCM is well-positioned within the
ad delivery ecosystem, as theatrical attendance is beginning to
meaningfully rebound," said Wedbush analyst Alicia Reese. 
         "Ultimately shares will rise as the company refocuses
post-restructuring."

 (Reporting by Akriti Sharma and Tiyashi Datta in Bengaluru;
Editing by Pooja Desai)
 ((Akriti.Sharma@thomsonreuters.com;))