FILE PHOTO: Signage is seen outside a Cineworld cinema following the outbreak of the coronavirus disease (COVID-19) in Manchester, Britain, October 4, 2020. REUTERS/Phil Noble/File Photo
By Yadarisa Shabong
(Reuters) – Cineworld, owner of the U.S. Regal cinema chain, secured an additional $750 million in funding on Monday to cushion itself against the impact of the coronavirus as it aims to reopen next year.
The deal, the latest in several rounds of debt reordering and restructuring which the company has been forced into since March, 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, has cut costs to $60 million a month with theatres closed.
The company, which has placed all capital expenditure on hold, said it has agreed long-term rent deferrals with key landlords, along with new lease agreements in some cases, while talks with other landlords are also ongoing.
Along with the issue of new warrants, it said it has secured $450 million in new loans, debt waivers until June 2022, extended its revolving credit line and expects a tax refund of over $200 million brought forward to 2021.
Cineworld has been carrying heavy debt due in part to its $3.6 billion acquisition of Regal in 2018.
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 20% in response to the deal, as stock market investors globally also welcomed more positive results from coronavirus vaccine trials.
“With vaccines on the horizon and liquidity secured, we think that (Cineworld) is now well-placed in a re-opening scenario,” analysts at Jefferies said.
(Reporting by Yadarisa Shabong in Bengaluru; Editing by Shounak Dasgupta and Keith Weir)
