Cineworld Secures $450M Debt Facility; New Steps To Ship $750M+ Additional Liquidity – .
The world’s second largest exhibitor and owner of Regal in the United States, Cineworld Group is a major token of confidence in the future of cinema and has secured significant additional liquidity to secure its future despite the ongoing challenges of the COVID-19 pandemic . This includes a new $ 450 million credit facility while other operational measures are in place to deliver improved profitability over the long term. In total, the measures announced today will provide more than $ 750 million in additional liquidity to support the business, said Mooky Greidinger, CEO of Cineworld.
Today, plans to issue stock option warrants, waive all financial covenants by June 2022, extend the $ 111 million incremental RCF from December 2020 to May 2024, and accelerate the U.S. tax year close are ahead of schedule Provides an expected tax refund of over $ 200 million in 2021.
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Cineworld says all of these steps taken together will provide the group with financial and operational flexibility until the COVID-19 lockdown restrictions in major jurisdictions are relaxed and the studios are able to get their major release pipeline back on screen.
CEO Mooky Greidinger stated, “The measures we are announcing today will provide over $ 750 million in additional liquidity to support our business. In the long term, the operational improvements we’ve made since the pandemic began will continue to improve 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 operations and welcoming movie fans around the world back to the big screen in 2021 for an exciting and complete list of films. “
Given the uncertainty about how long the COVID pandemic will last, Cineworld has worked with its financial advisors to plan several scenarios. The basic scenario assumes that the cinemas will reopen by May 2021 at the latest. Based on this assumption, Cineworld says it has enough leeway for 2021 and beyond.
In the event of further delay in reopening the theater, Cineworld expects to maintain sufficient liquidity for a few more months, but may need assistance from the lender to provide that liquidity.
The $ 450 million three-year non-call facility, primarily from US financial institutions, expires on May 23, 2024. After taking into account the new facility, the Group has a total of 4.9 gross debt financing Billion USD with a weighted average interest rate of approximately 4.5%. The facility also includes certain financial and operational requirements and allows the lenders to appoint a board observer.
Cineworld will issue 153,539,786 warrants to participating lenders, totaling 9.99% of the fully diluted common stock, provided the warrants are fully exercised.
Other measures include agreeing certain significant reductions and long-term rent deferrals with key landlords in connection with new leases under certain circumstances. Discussions about other possible cuts and deferrals will continue. In addition, all new Capex programs are currently being suspended.
These measures, along with a number of other operational initiatives, have resulted in Cineworld cutting its monthly cash spend to about $ 60 million while cinemas are closed.
A statement from Cineworld added: “Despite the success of these cost-saving measures and the other measures announced today, the Group will continue to review all options to ensure its business remains viable given the uncertainties about how long the Covid pandemic will last and its potential impact medium-term operating restrictions and the content pipeline.
These options include determining how best to use the financing proceeds announced today by US and UK companies and relevant subsidiaries within the group, as well as continuing discussions with landlords across the group’s estate and other key stakeholders in order to manage costs. “
Alicja Kornasiewicz, Chairwoman of Cineworld Group, said: “Given the severe financial challenges the group is facing due to the significant disruption to the entire industry, the Board of Directors is confident that this additional liquidity will maintain and maximize shareholder value over the long term.”