Cineworld adjusts leverage covenant, increases revolving facility

By Sarah Lizee

Olympia, Wash., May 28 – Cineworld Group plc announced that its lenders have agreed to waive the leverage covenant in its credit facility for the June 2020 testing date and have increased its leverage covenant to 9x net debt to EBITDA for the December 2020 testing date.

The group has also agreed to the terms of $110 million of additional liquidity through an increase in its revolving credit facility.

The revolver’s leverage covenant is triggered above 35% utilization, tested at half year and full year on a trailing 12-month basis. The next covenant test has been waived, with the next test occurring on Dec. 31. At Dec. 31, the leverage covenant requires net debt to EBITDA of below 9x on a pre-IFRS 16 basis. At June 30, 2021, the leverage covenant requires net debt to EBITDA of below 5.5x and reduces to 5x from Dec. 31, 2021 onwards.

In addition, the company has secured credit committee approval to apply for an additional $45 million through the CLBILS loan scheme in the United Kingdom and expects to begin a process soon to access $25 million through the U.S. government Cares Act.

Cineworld said it expects that this additional liquidity will provide it with sufficient headroom to support the group even in the unlikely event cinemas remain closed until the end of the year.

Cineworld is a London-based cinema operator.

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