- Shares expected to delist in July 2023
- Existing shareholders left with nothing
- Group to re-emerge from Chapter 11 with stronger balance sheet
Embattled cinema group Cineworld (CINE) said its shares will be delisted in July following the appointment of administrators, news that sent the shares down 26% to 0.54p.
The company stressed the administration application would apply to the parent company only and not to any operating companies or subsidiaries, which will continue to operate without disruption. The administration process will not affect the status or rights of employees.
Russ Mould, investment director at AJ Bell, said the latest events should not come as a surprise given ‘this fits with previously announced financial restructuring plans and adheres to earlier warnings that shareholders would be left with nothing. Importantly, its cinema operating subsidiaries will continue to trade as normal.’
(Chart could not be loaded)
WHAT HAPPENS NEXT?
The administrators will take steps to transfer all assets to wholly owned subsidiary Crown UK Holdco and a newly controlled entity of the lenders giving them ownership of Crown.
‘As such, although the plan is intended to allow the business of the group to emerge from the Chapter 11 cases as a continued going concern, it will not achieve a rescue of Cineworld Group plc itself,’ the company said.
Following an application to the FCA (Financial Conduct Authority), the shares will be suspended shortly after the board’s decision to appoint administrators, which is currently expected to take place in July 2023.
THE FUTURE OF CINEWORLD
The company said it will be ‘business as usual’ for the operating businesses and brands including Regal, Cinema City, Picturehouse and Planet while existing membership programmes such as Cineworld Unlimited in the UK will be honoured.
The group expects the proposed restructuring to ‘transform’ the balance sheet with the release of existing $4.53 billion of indebtedness, the provision of $1.46 billion of new debt financing and execution of a rights offering to raise proceeds of $800 million.
The senior management team have negotiated an exit package with the lenders worth up to $35 million according to a Financial Times report.
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (James Crux) own shares in AJ Bell.
LEARN MORE ABOUT CINEWORLD
