After reports last week saying that debt-laden exhibition giant Cineworld was considering bankruptcy, the group has issued a statement revealing a possible Chapter 11 filing in the U.S.
“In response to media speculation, Cineworld is today providing an update to its announcement on 17 August 2022 regarding an evaluation of strategic options to both obtain additional liquidity and potentially restructure its balance sheet through a comprehensive deleveraging transaction,” Cineworld, which which owns Regal Cinemas in the U.S., said on Monday.
“Cineworld and Regal theaters globally are open for business as usual and continue to welcome guests and members. The strategic options through which Cineworld may achieve its restructuring objectives include a possible voluntary Chapter 11 filing in the United States and associated ancillary proceedings in other jurisdictions as part of an orderly implementation process. Cineworld is in discussions with many of its major stakeholders including its secured lenders and their legal and financial advisers,” the statement added.
“Any such filing would be expected to allow the group to access near-term liquidity and support the orderly implementation of a fully funded deleveraging transaction. Cineworld would expect to maintain its operations in the ordinary course until and following any filing and ultimately to continue its business over the longer term with no significant impact upon its employees. As previously announced, any deleveraging transaction would, however, result in very significant dilution of existing equity interests in Cineworld,” the statement continued.
“Cineworld’s evaluation of these strategic options remains ongoing. A further announcement will be made if and when appropriate,” the statement concluded.
“Cineworld is expected to file a chapter 11 petition in the U.S. and is considering filing an insolvency proceeding in the U.K.,” the Wall Street Journal had reported last week.
The company recorded a $708.3 million loss before tax for the full year ending Dec. 31, 2021, a vast improvement from the $3 billion loss in 2020. However, the group’s net debt, excluding lease liabilities, increased by $492.7 million from $4.33 billion to $4.84 billion. In July 2021, Cineworld secured $200 million of additional liquidity via incremental loans.