Cineworld Group, owner of Regal Cinemas, is preparing to file for Chapter 11 bankruptcy protection in the US, The Wall Street Journal reported on Friday.
Executives at Cineworld made no direct comment on the media report, referring instead to CHEAP for an August 17 statement from the company that it is eyeing unspecified strategic options as it struggles to weather the summer doldrums for Hollywood trailers in theaters.
Bankruptcy protection will provide a debt-laden exhibitor with a way to stay afloat while also securing the capital needed to continue to recover from the COVID-19 box office.
The Magazine said that Cineworld has hired the legal firm Kirkland & Ellis LLP and consultants from AlixPartners to help prepare the bankruptcy filing. Cineworld is expected to begin conducting chapter 11 in the US and is looking into bankruptcy proceedings in the UK, the report said.
On Wednesday, Cineworld said its enrollment had fallen below expectations. It said “due to a limited drama that is anticipated to continue until November 2022 and is expected to negatively impact the group’s trading and liquidity position in the near term,” it added. .
The second largest exhibitor also noted: “Any write-off would likely result in a substantial dilution of existing equity interests in Cineworld.
After a strong recovery at the box office in the first half of 2022, major exhibition companies are looking for momentum to slow down in the second half of the year due to the absence of big Hollywood names following the show. Top Gun: Maverick and Minions: The Rise of Gru.
Cineworld has had a high level of debt for many years. Like many rival exhibitors, it has had a particularly difficult time dealing with the impending mountain of debt from the coronavirus pandemic. It needs new capital to stay afloat.
Its net debt stands at around $5 billion at the end of 2021. In July 2021, the company secured $200 million in incremental loans from a pool of its existing lenders and co. covenants to amend some of its existing debt bases, including reducing minimum liquidity requirements and easing restrictions on the use of cash.