In-debt Cineworld seeks to delay payments to former Regal shareholders

FILE PHOTO: People walk past a Cineworld in Leicester's Square in London
FILE PHOTO: A Cineworld in Leicester Square, London, Britain, October 4, 2020. REUTERS/Henry Nicholls

February 1, 2022

By Juliette Portala and Pushkala Aripaka

(Reuters) – Debt-ladden Cineworld is in talks to delay payments to former “dissenting” shareholders of its U.S. division Regal, the British chain said on Tuesday, to bolster its available cash as cinemas reopen amid a long-drawn legal dispute with Cineplex.

The London-listed company said it had obtained undertakings to waive off any default arising from non-payment of dues to creditors, including certain holders of the company’s guaranteed convertible bond due 2025.

Cineworld said in September it would pay $170 million to those shareholders, disgruntled with the 2017 price when it took over the U.S. chain and created the world’s second-largest movie theatre operator.

Shares in Cineworld fell as much as 3%, before paring losses to trade 1% lower by 1006 GMT.

“Cineworld should be a beneficiary of cinema’s revival… but whether the market will recognise this given the mess the company finds itself in is open to question,” AJ Bell investment director Russ Mould said.

The company said it was “hopeful” a satisfactory agreement with Regal former shareholders could be reached within the period afforded by the waivers.

SINGING IN THE RED

Although the success of the Marvel superhero film “Spider-Man: No Way Home” boosted Cineworld’s sales following a recent pickup, it has been struggling with debt of about $8.4 billion.

A large chunk of the group’s debt comes from the Regal deal, and Cineworld even contemplated a U.S.-listing to bolster finances.

Cineworld’s combined credit score – measuring how likely a company is to default in the next year on a scale of 100 (very unlikely) to 1 (highly likely) – was 1, according to Refinitiv Eikon data.

The firm was also hit by possible damages of C$1.23 billion ($969.80 million) in December over a botched deal with Canada’s Cineplex, a fine which some analysts said was bigger than Cineworld’s available resources.

($1 = 1.2683 Canadian dollars)

(Reporting by Juliette Portala and Pushkala Aripaka in Bengaluru; editing by Rashmi Aich)