Regal Owner Cineworld Says It’s Been Approached by Multiple Buyers Amid Bankruptcy Process

Exhibition giant Cineworld, which filed for Chapter 11 protection in the U.S., has told a virtual status conference that the company and its creditors are moving toward a court-directed settlement of the bankruptcy process.

On Wednesday, Joshua Sussberg, a lawyer for U.K.-based Cineworld, owner of the Regal Entertainment Group, told Judge Marvin Isgur of the U.S. Bankruptcy Court in Houston that the broad terms of a Chapter 11 stand-alone plan of reorganization had been reached, but that negotiations on a final deal and terms were ongoing.

“We of course do not have commitments for the financing or the equity. We have agreement on the terms. But suffice it to say, we’re going to proceed in earnest and negotiate this underlying plan,” Sussberg said ahead of a Feb. 21 court date set for the next stage of the Chapter 11 process and possible resolution.

An ad hoc consortium of legacy lenders for Cineworld provided around $2 billion in debtor-in-possession (DIP) financing for the bankruptcy process, and the lenders are working with the embattled cinema chain on a possible debt-for-equity exchange that the Texas court must approve.

Michael Messersmith of Arnold & Porter Kaye, acting for an ad hoc group of term lenders, told the court that “a significant amount of progress” had been made in negotiations with Cineworld. Messersmith said the legacy lenders, which represent around 35 equity funds, had sustained losses as they were required to step up and rescue Cineworld.

“That requires us again to insert additional funds, and that requires diligence on the company, and on the relationships they have with the industry and basically all the diligence that would go into a typical M&A transaction,” he told the court as talks on a possible Chapter 11 stand-alone plan continue.

Messersmith also told the court that while one option to resolve the Chapter 11 process included “ownership of this enterprise” via a debt-for-equity transaction, a possible sales process for Cineworld was also moving ahead on parallel tracks.

As part of indications of interest to the debtors from possible suitors, Messersmith said potential bidders had already reached out to gauge the willingness of lenders to finance any acquisition. But he said those discussions had been directed to Cineworld’s legal counsel, PJT Partners, as financial advisors.

Sussberg told Judge Isgur that multiple industry players had expressed interest in acquiring Cineworld. “And those parties come in all different shapes and sizes, with all different types of proposals. And we’re going to consider all of them in close coordination with our board, our independent directors and ultimately our lenders,” he added.

Sussberg noted the Cineworld’s legacy lenders are also in effect a bidder for the company as they negotiate a possible debt-for-equity exchange agreement. A question mark was also raised during the virtual court hearing over whether the current Cineworld senior management team will lead any reorganized company in the wake of a Chapter 11 resolution.

“This management team is committed to helping transition in any circumstance, whether it’s a third party sale or a lender led restructuring and we will negotiate and present to your honor the details of that plan,” Sussberg told the court judge.

The court hearing struck a comic tone after earlier in his presentation Sussberg had pointed to strong box office from Avatar: The Way of Water helping sustain Cineworld through the bankruptcy process, only to be followed by Judge Isgur indicating he hadn’t heard of the James Cameron tentpole.

“If you want me to scare everybody, I had no idea what Avatar is, but I appreciate the power point,” the court judge announced. When told he might view the Avatar sequel in a local Regal cinema this weekend, Judge Isgur said he was barred from buying a cinema ticket from a Cineworld venue while the bankruptcy case was ongoing.

“Wait for video,” Sussberg finally told the judge.