In a welcome development, Cineworld announced this week that its plan for restructuring has been approved by all its key stakeholders and the U.S. Federal Bankruptcy Court which has overseen the process. The company remains on track to emerge from bankruptcy in July, in line with its original “mid-year” estimate.
After restructuring, most of the company’s shares will be held by its former lenders, who have agreed to exchange up to $8.8B in debts for equity. The biggest losers in the process are its original shareholders, who have seen the value of their investment reduced to zero. Cineworld has also improved its balance sheet by closing 39 of its lower-performing Regal Cinemas locations and renegotiating the terms of its leases at many other sites.
Onlookers are relieved that almost all Cineworld theatres have continued to operate throughout the process, providing moviegoers with uninterrupted access to their theatres and the industry with much-needed box office receipts in support of its overall recovery.