Cineworld Group Plc is considering a voluntary Chapter 11 filing in the US as it seeks to cut its US$5 billion debt pile, the world’s second-largest cinema operator said in a filing Monday.
Its theaters remain open for business, the company said. On Friday, its shares plunged more than 80 per cent after reports that the firm was to file for bankruptcy within weeks.
The London-based cinema chain said it’s in discussions with many of its major stakeholders, including its secured lenders, over options, which could also include obtaining additional liquidity. Centerbridge Partners, Eaton Vance, Invesco Ltd. and State Street Corp. are among Cineworld’s creditors, Bloomberg reported on Friday.
Cinema operators have been struggling to bounce back from the pandemic with a weak release schedule and rising competition from online streaming services. On Aug. 17, Cineworld surprised investors with an announcement that it was looking to restructure its balance sheet, in a move that will “likely result in a very significant dilution of existing equity interests.”
Another UK group, Vue Cinemas, is seeking to restructure its debt in court and transfer ownership from a pool of Canadian pension funds to its lenders.
Cineworld amassed a heavy debt load after buying Regal. Its adjusted earnings before interest, tax, amortization and depreciation were just US$455 million in the last financial year, according to its latest annual report. It also faces nearly US$1 billion in damages to Canada’s Cineplex Inc. over a takeover bid that was aborted in 2020.
Chapter 11 bankruptcy allows a company to continue operating while it works out a plan to repay creditors. The company is also considering to start “ancillary proceedings” in other jurisdictions, Cineworld said in the statement.
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