Cineworld Group will end its 16-year existence as a publicly traded company next month, as administrators prepare the transfer of all assets to a private corporate entity.
Unselected administrators will be appointed to oversee the restructuring of the second largest cinema chain in the world as it emerges out of chapter 11 bankruptcy.
The restructuring will be done through a debt for equity swap, which transfers control of the assets to lenders. It will also involve an equity raise of $800 millions and a new debt financing of $1.46 billion. The debt will be reduced by $4.5 billion.
Cineworld was founded in 1995 and operates in almost 750 locations in ten different countries. It was listed in 2007, but due to debt-fueled expansion, it was close to bankruptcy and had to file for bankruptcy in America in September last year.
When Cineworld emerges from bankruptcy, the chief executive and three other executives are each entitled to a total of $35 million .
Mooky Greidinger and his brother Israel are stepping down. They will be sharing $35 million in consulting fees over the next year and a smooth exit.
The size of the amount has raised eyebrows, given the dire financial condition they left the company in. On Monday, it was confirmed that the restructuring proposal “doesn’t provide any recovery to holders of Cineworld’s existing equity interest” due to the amount of debt being wiped out.
Mooky Greidinger is stepping down as chief executive and his brother Israel will be the deputy chief executive.
Cineworld Group plc is the parent company of the group, and therefore the administration proposal will not affect any employee’s rights or status.
The administrators will take action to transfer “substantially” all of Cineworld’s assets to Crown UK Holdco Limited, a fully owned subsidiary. Crown will be owned by a new company created by the lenders of the group. The listed plc ceases to own any stake in Crown and the rest of group.
Cineworld will cancel its listing and administration the next day at 8am, once the group has applied to appoint administrator, which is expected to occur in the coming month.
Analysts said that despite the claim of “business as usual”, Cineworld will likely emerge as a smaller player. The company’s Regal cinemas in America began to close their doors as of September. It is trying to get out from under 130 leases. It is also rumored that the company has been in talks with its UK landlords about rent levels. There was talk that up to 30 theatres would close if they did not reduce rents.
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