Cineworld emerges from bankruptcy, slashing debt by $4.53 billion

By Sarah Lizee

Olympia, Wash., Aug. 1 – Cineworld Group plc’s Chapter 11 plan of reorganization went into effect on Monday, according to a notice filed with the U.S. Bankruptcy Court for the Southern District of Texas.

The plan was confirmed on June 28, as previously reported.

Through this process, the Cineworld debtors reduced their funded debt by roughly $4.53 billion, raised about $800 million in new equity capital, and secured new debt financing totaling about $1.71 billion, including a $1.46 billion term loan and $250 million revolver.

“With this strengthened and recapitalized balance sheet, the group is well-positioned to pursue future strategic initiatives and continue providing leading cinematic experiences for customers globally, including through investments in new screen formats and enhancements to its flagship theatres,” the company said in a Monday press release.

New board of directors

New directors have been appointed to the board to oversee the group and its strategic direction. The board is led by chairperson Eric Foss who previously served as chairman and chief executive officer of Pepsi Bottling Group and Aramark.

Eduardo Acuna, Cineworld’s new chief executive officer, joins Foss on the board. Acuna’s previous roles included president of Cinepolis Americas and Cinepolis Do Brazil.

Other new additions to the board include Ann Sarnoff, the former chair and CEO of Warner Bros.; Patrick J. Bartels, the managing member of Redan Advisors LLC; Steve Joyce, former CEO of Dine Brands Global and former executive at Marriott International; Stefano Malfitano, a principal at Cyrus Capital Partners; and Blythe J. McGarvie, former CEO of LIF Group and former chief financial officer of Hannaford Bros.

Plan terms

As previously reported, the company had entered into a restructuring support agreement and a backstop commitment agreement with lenders holding about 83% of the group’s term loans due 2025 and 2026 and revolving credit facility due 2023. Throughout the Chapter 11 process, additional lenders acceded to the agreements.

The lenders committed to provide a first-lien exit facility and backstop an equity rights offering in connection with the restructuring.

Lenders under the legacy facilities received equity in the reorganized group in exchange for the release of their claims under the legacy facilities.

The group raised $800 million in total gross proceeds through the fully backstopped equity offering to the legacy lenders and a direct equity offering to certain legacy lenders.

The proceeds of the rights offering and the exit facilities were earmarked for the repayment in full the roughly $1.94 billion debtor-in-possession facility entered into by the group when it started the Chapter 11 cases, to fund the costs associated with emergence from the cases and to fund the go-forward business operations.

Holders of class 5A general unsecured claims were to receive their pro rata share of 40% of the GUC recovery pool. The pool consists of $10 million in cash and litigation trust interests, less any litigation trust expenses.

Holders of class 5B general unsecured claims were to receive their pro rata share of 60% of the GUC recovery pool.

Other secured claims, other priority claims and Midwest facility claims are unimpaired under the plan.

The restructuring does not provide any recovery for holders of Cineworld’s existing equity interests or holders of section 510(b) claims.

Through the backstopped rights offering, the legacy lenders were offered, pro rata to their holdings under the legacy facilities, the right to purchase shares in the reorganized group in a total purchase amount of $400 million.

The participating lenders purchased shares in the reorganized group in a total purchase amount of $400 million through the direct allocation offering and be paid a backstop fee equal to 20% of the issued share capital in the reorganized group after giving effect to the proposed restructuring, including the rights offering.

The price payable to subscribe for shares under the rights offering was set at a 25% discount to an implied equity value of the group after giving effect to the restructuring of $1.48 billion.

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.