Regal Owner Cineworld Boosts Liquidity by $750 Million

Cineworld CEO Moshe "Mooky" Greidinger - H 2019
Courtesy of Cineworld

Cineworld, led by CEO Mooky Greidinger, says new measures, including a $450 million debt facility, give it "flexibility until lockdown restrictions in key jurisdictions are eased and studios are able to bring their enhanced pipeline of major releases back to the big screen."

Cineworld Group, the world's second-largest cinema exhibitor and owner of the Regal theater chain in the U.S., on Monday said it has secured a new $450 million debt facility and was implementing operational measures to give it $750 million in extra liquidity to keep the business afloat amid the COVID-19 pandemic.

Cineworld said it "believes that together these steps will provide the group with financial and operational flexibility until lockdown restrictions in key jurisdictions are eased and studios are able to bring their enhanced pipeline of major releases back to the big screen."

Cineworld CEO Mooky Greidinger set out the plans, including accelerating U.S. tax year closure to bring forward to early 2021 an expected tax refund of more than $200 million, extending the maturity of a $111 million revolving credit facility from December 2020 to May 2024, issuing equity warrants, and the waiver of all bank financial covenants until June 2022.

"The measures we are announcing today deliver over $750 million of extra liquidity to support our business," said Greidinger. "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 around the duration of the COVID-19 pandemic, Cineworld has worked with its financial advisers 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 liquidity for 2021 and beyond. If cinemas stay closed longer, Cineworld expects to have sufficient liquidity for a number of additional months but said it may require lender support in order to deploy that liquidity.

The $450 million, three-year non-call facility, drawn mainly from U.S.-based financial institutions, matures May 23, 2024. With the new debt burden, Cineworld Group will have aggregate gross debt financing of $4.9 billion with a weighted average interest rate of approximately 4.5 percent. 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 percent of the fully diluted ordinary share capital, assuming full exercise of the warrants.

The company in October announced it would temporarily shut down all of its U.K. and U.S. cinemas, citing the lack of studio blockbuster releases during the COVID-19 pandemic as the main reason.

Cineworld on Monday said it has secured long-term rent deferrals with some of its key landlords and has new lease agreements in places at certain locations. These and other measures have helped bring down Cineworld's monthly cash burn to around $60 million while cinemas remain closed, the company said.

But the group said it is still considering "all options" to ensure 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," said Alicja Kornasiewicz, chair of Cineworld, adding that the company is continuing discussions "with landlords and other key stakeholders to manage costs."

However, Kornasiewicz said the company's board was "confident this additional liquidity will preserve and maximize shareholder value over the long term."