UK’s Cineworld buys time to survive theatre closures

FILE PHOTO: People enter a Cineworld cinema following the outbreak of the coronavirus disease (COVID-19) near Manchester, Britain, October 4, 2020. REUTERS/Phil Noble

(Reuters) – Britain’s Cineworld sealed another deal with creditors on Monday, including $450 million in financing that the owner of the Regal theatre chain hopes will tide it over until Hollywood studios return to more regular film release schedules.

The deal, the latest in several rounds of debt reordering and restructuring which the company has been forced into since March, also involved the issue of equity warrants which could hand around 10% of company shares to its creditors.

“We look forward to resuming our operations and welcoming movie fans around the world back to the big screen for an exciting and full slate of films in 2021,” Chief Executive Officer Mooky Greidinger said.

Cineworld, which has shut 536 Regal theatres in the U.S. and its 127 Cineworld and Picturehouse theatres in the UK, said it had cut costs to $60 million a month with theatres closed and had $750 million of available cash.

While U.S. rival AMC Entertainment has kept its doors open with enough cash until early 2021, Cineworld’s base case scenario assumes it has enough money if it reopens its venues by next May.

Shares in Cineworld, which have lost three quarters of their value since the start of this year, jumped 17% in response to the deal, as stock market investors globally also welcomed more positive results from coronavirus vaccine trials.

Cineworld has been carrying heavy debt due in part to its $3.6 billion acquisition of Regal in 2018.

The company, which has placed all capital expenditure on hold, said it has agreed long-term rent deferral with key landlords, along with new lease agreements in some cases, while talks with other landlords are also ongoing.