Cineworld Shares Drop Further as Cinema Chain Files Restructuring Plan in US

Cineworld (LON: CINE) shares tumbled further on Tuesday after the company filed a plan of reorganisation with the United States Bankruptcy Court for the Southern District of Texas, Houston Division.

CINE is down 16% at the time of writing, adding to its massive 95% decline in the last 12 months.

In September, the world’s second-largest cinema chain operator placed the majority of its business under US Chapter 11 bankruptcy protection. Last week, Cineworld ditched plans to sell its UK, US, and Ireland business after it failed to find a buyer.

The company also proposed a new debt deal which includes a $1.46 billion loan facility and a new share offering of $800 million, giving creditors a 100% stake in the company. Cineworld revealed the deal will slash its debts by $4.53 billion, allowing it to stay in business.

Cineworld said on Tuesday that its plan is backed by lenders holding and controlling approximately 83% of the company’s term loans due 2025 and 2026 and revolving credit facility due 2023.

In addition, the proposed restructuring does not provide for any recovery for holders of Cineworld’s existing equity interests.

Cineworld expects to emerge from the Chapter 11 cases during the first half of 2023, although it warned that any sale transaction resulting from the marketing process could delay its emergence beyond the first half.