The Cineworld Group plc (LON: CINE) share price fell 21.9% after issuing an update regarding the ongoing Chapter 11 bankruptcy cases in the United States. The company revealed plans to file for administration in the United Kingdom, followed by delisting Cineworld Group Plc shares.
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The cinema operator noted that once the restructuring is implemented, the company would release debt worth $4.53 billion and conduct a rights issue to raise $800 million. The movie theatre chain would also get $1.46 billion in new debt financing to help it continue running its global operations.
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Investors were unhappy to hear Cineworld confirm that all current equity holders would be wiped out once the Chapter 11 bankruptcy process ended. The company plans to file for administration in the UK before concluding the bankruptcy process.
Cineworld chose to restructure its debt after efforts to find a buyer for the entire company yielded little positive results, given the multiple challenges facing the movie theatre industry. Nobody was willing to purchase the company, although it got offers for its Eastern European business.Â
The administration application would only apply to Cineworld Group plc itself (as the listed parent company of the Group) and not to any of the operating companies or subsidiaries in the rest of the Group, which would continue to operate as usual without interruption.
Cineworld promised that the administration would not affect its businesses or employees. Once the administrators are appointed, they will take steps through which substantially all of Cineworld Group plc's assets will be transferred to its wholly owned subsidiary, Crown UK Holdco Limited.
Crown UK Holdco is a newly registered company to be controlled by the Group's lenders, who will become the sole owners of Crown, with the Cineworld Group plc ceasing to have any interest in Crown or the rest of the Group.
Cineworld’s shares will be suspended from trading on the London Stock Exchange’s (LSE’s) main market for listed securities the day after the appointment of UK administrators. The administration is expected to be effective in July, shortly before Cineworld emerges from the Chapter 11 bankruptcy process.
*This is not investment advice.
Cineworld share price.
The Cineworld share price fell 21.92% to trade at 0.57p, from Friday’s closing price of 0.73p.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.