Cineworld Secures $450M Debt Facility; New Measures To Generate Over $750M In Extra Liquidity For Regal Owner

Movies

In a major sign of confidence in the future of theatrical moviegoing, Cineworld Group, the world’s second largest exhibitor and owner of Regal in the U.S., has secured significant additional liquidity that will help ensure its future despite ongoing challenges created by the COVID-19 pandemic. This includes a new debt facility of $450M, while further operational measures will be implemented to deliver enhanced profitability over the long term. In total, measures announced today will deliver over $750M of extra liquidity to support the business, Cineworld CEO Mooky Greidinger said.

Also set out today are plans for the issue of equity warrants, the waiver of all bank financial covenants until June 2022, extended maturity of the $111M incremental RCF from December 2020 to May 2024 and an accelerated U.S. tax year closure to bring forward to early 2021 an expected tax refund of over $200M.

Cineworld says that all combined, these steps will provide the group with financial and operational flexibility until COVID-19 lockdown restrictions in key jurisdictions are eased and studios are able to bring their pipeline of major releases back to the big screen.

CEO Mooky Greidinger noted, “The measures we are announcing today deliver over $750M of extra liquidity to support our business. Over the long term, the operational improvements we have put in place since the start of the pandemic will further enhance Cineworld’s profitability and resilience. The Group continues to monitor developments in the relevant markets in which we operate and our entire team is focused on managing our cost base. We look forward to resuming our operations and welcoming movie fans around the world back to the big screen for an exciting and full slate of films in 2021.”

Given the uncertainty of the duration of the COVID pandemic, Cineworld has worked with its financial advisors to plan for multiple scenarios. The base scenario assumes a reopening of cinemas no later than May 2021. Under this assumption, Cineworld says it has sufficient headroom for 2021 and beyond.

In the event of a further delay to the cinema reopening, Cineworld expects to retain sufficient liquidity for a number of additional months, but may require lender support in order to deploy that liquidity.

The $450M three year non-call facility, which hails from mainly U.S.-based financial institutions, matures on May 23, 2024. After accounting for the new facility, the Group will have aggregate gross debt financing of $4.9B with a weighted average interest rate of approximately 4.5%. The facility also includes certain financial and operating covenants and entitles the lenders to appoint a board observer.

Cineworld will also issue to participating lenders 153,539,786 equity warrants representing in aggregate 9.99% of the fully diluted ordinary share capital, assuming full exercise of the warrants.

Further measures include the agreement of certain material abatements and long term rent deferrals with key landlords, in conjunction with new lease agreements in some circumstances. Discussions are continuing in relation to other potential abatements and deferrals. In addition, all new Capex programmes are currently on hold.

These actions, together with a number of other operational initiatives, has seen Cineworld reduce its monthly cash expenditures to approximately $60M whilst cinemas are closed, the company said.


A statement from Cineworld also added, “Despite the success of these cost saving actions and the other measures announced today, the Group will continue to consider all options to ensure that its business remains viable in light of the uncertainties regarding the duration of the Covid pandemic and its potential impact on medium-term operating restrictions and the content pipeline.

These options will include determining how the proceeds of the financing announced today should best be utilised by the US and UK businesses and the relevant subsidiaries within the Group, and continuing discussions with landlords across the Group’s estate and other key stakeholders to manage costs.”


Alicja Kornasiewicz, Chair of Cineworld Group, said, “In light of the severe financial challenges facing the Group arising from the significant disruption to the entire industry, the Board is confident this additional liquidity will preserve and maximise shareholder value over the long term.”

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