Ailing cinema chain Cineworld has announced a debt restructuring package with its biggest lenders that will help bring it out of Chapter 11 bankruptcy proceedings.
The company — whose brands include Regal, Cinema City, Picturehouse and Planet — entered Chapter 11 in September, weighed down by $8.8bn in debt and lease liabilities.
Under the proposal, the lenders will reduce the debt pile by $4.5bn and receive equity in the reorganised group; provide new debt of $1.5bn; and backstop an $800mn equity rights issue. The deal “does not provide for any recovery for holders of Cineworld’s existing equity interests”, Cineworld said in a statement on Monday.
Cineworld shares dropped more than 23 per cent on the news.
Mooky Greidinger, chief executive of Cineworld, said: “This agreement with our lenders represents a ‘vote-of-confidence’ in our business and significantly advances Cineworld towards achieving its long-term strategy in a changing entertainment environment.”
Last week, the FT reported that the chain’s lenders were planning to oust Greidinger in a management shake-up.