Cineworld has reportedly decided to terminate the sale of its so-called “rest of the world” businesses outside of the U.S., the UK, and Ireland. The company said it received offers from “a number of prospective counterparties,” but added the proposals “did not meet the value level required by the group’s lenders.”
The “rest of world” businesses include cinemas in Israel, Poland, Czech Republic, Slovakia, Hungary, Bulgaria, and Romania.
Cineworld saw its share price fall by nearly 30 percent after announcing it would terminate the move.
Cineworld, which is aiming to emerge from bankruptcy later this year, recently determined that it would cease seeking a buyer for its businesses in the U.S., the UK and Ireland. The company said it did not receive an all-cash bid significantly higher than the value established under its proposed restructuring.
Sources said eliminating the possible sale transactions could help ensure that Cineworld meets its goal of emerging from Chapter 11 on an “expeditious timeline.”
Cineworld filed for bankruptcy last fall in the U.S. Bankruptcy Court for the Southern District of Texas. Earlier this month, it said it had reached a conditional agreement with lenders to emerge from Chapter 11. Last week the company submitted a reorganization plan to the Texas court. Judge Marvin Isgur has set April 20 as the date to go over the plan and set May 26 as a confirmation date.
Cineworld today said it continues to move forward with the proposed restructuring in the Chapter 11 cases. Certain creditor approvals, among other requirements, will need to be obtained in order for the bankruptcy court to confirm the plan. A shareholder meeting will be held in London on April 20 as required by UK securities law.
Cineworld is the world's second-largest cinema chain. The exhibitor employs more than 28,000 people across 740 sites globally and now plans to raise more than $2 billion of new funding.
The company said it would continue to consider proposals for the sale of its business outside the US, UK and Ireland.
Cineworld says that its proposal to the court is “supported by lenders holding and controlling approximately 83 percent of the group’s term loans due 2025 and 2026 and revolving credit facility due 2023 and approximately 69 percent of the debtors’ outstanding indebtedness under the debtor-in-possession financing facility.”
The debt-for-equity swap will effectively wipe out Cineworld’s existing shareholders. “In light of the level of existing debt that is proposed to be released under the plan, the proposed restructuring does not provide for any recovery for holders of Cineworld’s existing equity interests,” the company said.