Cineworld to apply for UK administration as part of restructuring

June 26 (Reuters) – The embattled operator of the cinema chain Cineworld Group (SAUCER) It said on Monday it will apply for administration in Britain and suspend listing on the London Stock Exchange next month as part of a restructuring plan to reduce its massive debt.

Shares of the world’s second-biggest cinema chain, which filed for bankruptcy in the United States in September, fell 26% to 0.52 pence in morning trading.

The company had disclosed net debt of about $8.8 billion, according to its latest results at the time.

The British company said the administrators, once appointed, would transfer all of its assets to a wholly owned subsidiary called Crown, and a newly incorporated company controlled by the group’s lenders would become the sole owner of Crown, with Cineworld no longer holding any interest in the parties.

As a result, its London-listed shares will also be suspended.

The proposed restructuring will involve the release of about $4.53 billion of the group’s debt, a rights offer to raise gross proceeds of $800 million and the provision of $1.46 billion in new debt financing, Cineworld said.

The owner of Regal in the United States and Picturehouse, Planet and Cinema City across Europe had scrapped plans to sell some or all of its businesses after failing to find a buyer.

He opted for a restructuring plan that effectively removes capital from existing shareholders.

Hard hit by the COVID-19 pandemic that shuttered theaters and halted blockbuster movie releases, Cineworld also faced increased competition from streaming services.

The company continues to hope to emerge from Chapter 11 bankruptcy protection in July, after saying in May that its debt restructuring proposal had the support of most of its lenders.

However, the restructuring plan would not yet contemplate any recovery for its current shareholders, Cineworld added.

The company operates around 128 theaters in the UK and Republic of Ireland, and over 700 around the world.

Reporting by Eva Mathews in Bangalore; Edited by Dhanya Ann Thoppil, David Goodman, and Emelia Sithole-Matarise

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