LONDON (CelebrityAccess) — In a significant development, British cinema operator Cineworld has announced its decision to file for administration in the UK, following a prior bankruptcy filing in the United States last year.
Cineworld aims to address its financial challenges through a proposed bankruptcy plan, which it believes will bring about a transformation in its balance sheet. The plan involves reducing approximately $4.53 billion in debt, while securing “significant additional liquidity” to support the company’s long-term operations and future strategy.
As part of the restructuring efforts, Cineworld plans to initiate a rights offering in an attempt to raise $800 million. Additionally, the company intends to secure around $1.46 billion in new debt financing.
Under the administration plan, all assets of Cineworld Group plc will be transferred to its wholly owned subsidiary, Crown UK Holdco Limited (“Crown”). Subsequently, a newly incorporated company controlled by the Group’s lenders will become the sole owner of Crown, resulting in Cineworld Group plc no longer holding any interest in Crown or the rest of the Group. It is important to note that Cineworld’s current equity interests would be eliminated as part of the proposed restructuring plan.
Subject to approval, Cineworld expects to emerge from Chapter 11 in the US in 2023, with theater operations anticipated to continue throughout the administration process.
Cineworld, ranked as the world’s second-largest cinema operator after its American competitor AMC, had previously filed for bankruptcy protection in the US in September. The company faced mounting challenges, including over $5.2 billion in debt and the shifting landscape of movie viewership due to the rise of streaming platforms, compounded further by the industry-wide shutdown caused by the COVID-19 pandemic in 2020.
