Cineworld lands additional $250m lifeline as it prepares for re-opening
Cineworld has today said it has secured an additional $250m in financing, as it gears up to reopen venues and face a costly legal battle with former deal partner Cineplex.
The UK cinema chain told traders this morning it had agreed terms on a new $250m secured debt facility with a maturity of 2023, in partnership a group of private institutional investors.
It said that this move, together with a revolving credit facility increase of $110m announced last month, “further strengthens the group’s balance sheet” as it targets a re-opening timeframe in July.
The news comes as Cineworld faces the threat of hefty legal proceedings, after pulling out of a £1.6bn deal with Canadian rival Cineplex earlier this month.
Cineplex said last week it would “promptly” start legal proceedings against Cineworld over its “abandonment” of the deal, which it believes was terminated as a result of the economic downturn caused by coronavirus.
Cineworld blamed the breakdown on “certain breaches” of the deal’s terms, as well as having suffered a “material adverse effect” that meant it could not continue with the buyout. It had previously agreed to buy Cineplex at CA$34 per share in December, subject to approval by the Canadian competition regulator.
Cineplex is set to file its quarterly results on Friday, which will show the brunt of the damage from forced cinema closures worldwide. The pandemic has knocked almost CA$1bn off its market value to date.
A report from ratings agency Moody’s last week suggested UK cinema chains such as Cineworld could struggle even after reopening, as Brits adjust to viewing at home.
“Cinemas have been severely hit by theatre closures, but we expect a gradual reopening from July. Attendance will likely remain low at least for a few months due to social-distancing measures or moviegoers’ health concerns,” said Moody’s vice president and senior credit officer Gunjan Dixit.
“With the easing of lockdown restrictions in key jurisdictions, Cineworld is excited to welcome customers back to cinemas and enjoy the best place to watch a movie,” Cineworld said in a statement today.