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Cineworld files for Chapter 11 protection

Global cinema chain files for US version of administration saying it has found new debt, as its existing borrowings and lease liabilities send it underwater
September 7, 2022

Cineworld (CINE) says filing for bankruptcy protection in the US does not mean it is curtains for the whole business, despite its mammoth debt pile, tiny market capitalisation and potentially incoming $1bn (£870mn) fine.

The company had confirmed a report at the end of last month that it was considering the move given the magnitude of its problems. The UK equivalent is a scheme of arrangement or restructuring. Cineworld said its shares would likely continue trading on the London Stock Exchange. 

The company said it had already lined up $1.9bn in emergency lending through a “debtor-in-possession” arrangement that comes in during the Chapter 11 process.

It will also try to renegotiate leases, while existing management will stay in post. “Cineworld currently anticipates emerging from Chapter 11 during the first quarter of 2023,” the company said. Its market cap is down to under £60mn, and the company said “very significant” dilution would be likely to hit remaining shareholders. 

Chief executive Mooky Greidinger said there was a salvageable business under the net debt load of almost $9bn, including leases. 

"This latest process is part of our ongoing efforts to strengthen our financial position and is in pursuit of a de-leveraging that will create a more resilient capital structure and effective business," he said. The Financial Times earlier reported Greidinger would hold onto a stake in the business that he and his brother grew into a global giant in any handover to creditors. 

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Last IC View: Sell, 4p, 22 Aug 2022