Cineworld Weighs Rival Rescue Plans From Lenders, Centerbridge
(Bloomberg) -- Cineworld Group Plc is weighing two competing offers from creditors to keep the world’s second-largest cinema chain in business through the pandemic.
Centerbridge Partners, which already provided the bulk of a $250 million loan to Cineworld in June along with Arcmont Asset Management and Sand Grove Capital Management, has offered a new credit facility that would be secured by some of the company’s assets, according to people with knowledge of the matter.
Senior lenders are working on their own proposal for a new loan that would rank equally with the bulk of the existing debt, according to the people, who asked not to be named discussing a private matter. Those lenders are represented by law firm Arnold & Porter Kaye Scholer and investment bank Houlihan Lokey Inc., the people said.
The lender group wrote a letter to Cineworld this month presenting grievances and objecting to the idea of pledging assets to other creditors such as Centerbridge, contending that the same collateral is already guaranteeing their loans, the people said.
Representatives for U.K.-based Cineworld, New York-based Centerbridge and Houlihan Lokey declined to comment. Arnold & Porter didn’t have an immediate response. The two offers are still being discussed by creditors and the company and the terms could change, the people said.
The extra cash would help Cineworld stay afloat after it closed theaters in the U.K. and U.S., following the decision by studios to delay the release of blockbusters for the next few months. Cineworld’s Deputy Chief Executive Officer Israel Greidinger said in September the company was considering raising at least $200 million.
Separately, Cineworld is planning to file a so-called company voluntary arrangement in the U.K., which would include getting consent from landlords to cut rents and shut down sites, the people said. The potential CVA filing was reported earlier by the Financial Times.
Chief Executive Officer Mooky Greidinger decided to shut Cineworld’s U.S. and U.K. theaters in October, putting 45,000 jobs at risk. The company also hired advisers to help ease debts that swelled to about $8.5 billion after the acquisition of Regal Entertainment Group. Price quotes for Cineworld’s term loan are hovering at less than 70 cents on the dollar.
Theater owners including AMC Entertainment Holdings Inc., the biggest in the business, have been buffeted by government-ordered shutdowns and the reluctance of movie-goers to show up even when the venues are open. The result has been a cycle of weak attendance that spurs studios to withhold expensive blockbusters, which further discourages customers from coming.
Cineworld has been getting financial and legal advice from PJT Partners Inc. and Kirkland & Ellis, with strategic advice from AlixPartners LLP, Bloomberg reported earlier.
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