Cineworld’s amended $1.94 billion DIP financing approved by court

By Sarah Lizee

Olympia, Wash., Nov. 1 – Cineworld Group plc’s $1.94 billion in debtor-in-possession financing from existing lenders was approved Monday, according to an order filed with the U.S. Bankruptcy Court for the Southern District of Texas.

In a statement filed Monday, the official committee of unsecured creditors said that following several weeks of discussions with the lenders, the parties reached a consensual resolution on the terms of the DIP facility.

“The committee’s negotiations with the DIP lenders and the debtors have resulted in a number of favorable modifications to the DIP facility,” the committee said

Among other changes, the modifications

• Extended milestones to accommodate an alternative value-maximizing transaction process that will start following completion of a business plan, in which the debtors will test the market for alternative paths of reorganization that would maximize value to all of the debtors’ constituents, including third-party sale transaction, plan sponsorship, standalone reorganization, or other resolutions;

• Extended the challenge period as to the prepetition legacy facility to 80 days following the appointment of the committee and increased the committee’s investigation budget to $500,000;

• Soft marshalling with respect to any avoidance action proceeds and commercial tort claims, so that the holder of any DIP liens and superpriority claims, or adequate protection liens and superpriorty claims, may recover from the proceeds of any avoidance actions and commercial tort claims only after such holder has made commercially reasonable efforts to seek recovery from other collateral for such liens and claims;

• Payment of stub rent at a minimum of $5 million per month for four months, beginning in November, with potential for increased payments if the debtors beat the budget. In the event stub rent is not paid the committee and affected landlords will have the ability to assert a surcharge against the DIP lenders’ collateral;

• Liens and superpriority administrative expense claims against debtor transferees on account of any post-petition intercompany transactions between debtors, as well as a requirement that debtors take all commercially reasonable steps to obtain a security interest to secure the repayment of any intercompany transaction with non-debtor affiliates;

• No adequate protection liens on the property of entities that are not obligors under the prepetition loan documents and all rights of the committee are preserved to challenge the addition of Cineworld Funding (Jersey) Ltd. as a guarantor or obligor under the DIP facility;

• Preservation of rights for any party with requisite standing to argue that Cineworld Group plc did not receive any benefit under the DIP facility; and

• Committee consultation and information rights with respect to development of the debtors’ business plan.

Barclays is bookrunner and administrative agent.

Interest is SOFR plus 1,000 basis points.

The facility is set to mature in one year, subject to three one-month extensions.

Cineworld is a London-based cinema operator. The company filed bankruptcy on Sept. 7 under Chapter 11 case number 22-90168.

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