Cineworld minority lender group may submit alternative exit deal by May 2

By Sarah Lizee

Olympia, Wash., April 21 – A minority lender group of Cineworld Group plc has been given until May 2 to submit an alternative exit financing proposal to the U.S. Bankruptcy Court for the Southern District of Texas.

As background, the company has lined up a restructuring support agreement with holders of about 89% of the principal amount of its legacy facilities.

The deal would provide $1.46 billion, net of original issue discount, of new debt financing to the company at emergence from Chapter 11, as well as $800 million in total gross proceeds through a fully backstopped equity offering to the legacy lenders and a direct equity offering to some of the legacy lenders.

Objection

The minority lender group objected to the proposed financing and backstop commitment, saying that the majority lender group manufactured the need for a backstop by “excluding other lenders from its ranks.”

“The terms of the backstop commitment agreement are egregious, unprecedented and highly discriminatory,” the group said in its objection.

In a response to the objection, counsel for the debtor said that the objecting lenders were offered the opportunity to fully participate in the capital raise on a pro rata basis, and the objection is mostly about the backstop commitment, which is only available to the majority lenders.

“The backstop commitment is available only to the ad hoc group as consideration for the considerable efforts they expended in negotiating and entering into the financing commitment and backstop agreement – not to mention the several months leading to this point,” the debtor’s counsel said.

“The objection is a transparent attempt to gain the benefit of the [equity rights offering] backstop premium and the exit first-lien facility premium, without doing the work and dedicating the resources for which the two premiums are intended to compensate.”

Alternative deal

The minority lender group said at a hearing held Thursday that it has lined up a $1.46 billion exit facility via Jefferies LLC to be able to compete with the existing deal, but it needs additional time to raise more financing for a backstop commitment.

Terms of the alternative financing are largely the same as what is proposed under the RSA exit facility, except the interest rate would be SOFR plus 600 basis points, rather than SOFR plus 850 bps.

The minority lender group said it is confident that it can propose a superior equity rights offering in short order.

At the Thursday hearing, judge Marvin Isgur said he would wait until May 2 to see what the minority lenders are able to bring.

Cineworld is a London-based cinema operator. The company filed bankruptcy on Sept. 7, 2022 under Chapter 11 case number 22-90168.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.