A U.S. Bankruptcy Court judge granted Regal Cinemas’ parent Cineworld immediate access to up to approximately $785 million of a financing facility, providing sufficient liquidity for the giant theater chain to meet ongoing obligations, including to vendors, suppliers and employee salaries and benefits.
The remainder of the total $1.9 billion DIP, or debtor-in-possession facility will become available upon Court approval on a final basis.
The decision provides needed funds for the company, which was in dire straits with only $4 million of cash on hand.
“Today’s approval of our requested ‘first day’ relief is a positive step forward for the Group and our restructuring efforts,” said CEO Mooky Greidinger. “As we position Cineworld for long-term growth, through this Chapter 11 process and beyond, we remain steadfast in our commitment to providing our guests with the most memorable moviegoing experiences and maintaining our long-standing relationships with our business partners.”
Cineworld, with 747 theaters and 9,139 screens globally, filed for Chapter 11 in the Southern District of Texas on Wednesday and announced a so-called DIP, or debtor-in-possession, loan from a consortium of lenders to keep operating while it cleans up its balance sheet.
The agreement and approval by Judge Marvin Isgur came at nearly midnight yesterday after a hearing that started in the morning and stretched on-and-off throughout the day. The judge noted at the close of the hearing that the DIP deal will keep Cineworld operating. Without it, “this business would have been closed.”
An initial financing proposal by debtholders was adjusted, with $1 billion of the total meant to refinance pre-petition loans from the same group of debtholders, now being put into an escrow account pending the expiration of a challenge period.
Cineworld, which had accumulated debt acquiring Regal in 2018, was crippled by Covid theater closures, weak attendance and a temperamental studio release schedule. A $1.24 billion judgement against it by Cineplex of Canada is under appeal, with a hearing scheduled for October. A bump in admissions early this year was promising but tentpoles dried up in late summer, tipping the chain into Chapter 11.