A U.S. bankruptcy court judge granted Cineworld, the parent company of Regal Cinemas, immediate access to an approximately $785 million line of credit, which provided the cinema giant with sufficient liquidity to meet current obligations, including to vendors, suppliers, wages and employee benefits.
The remainder of the total $1.9 billion DIP or debtor-in-possession loan will become available upon final approval by the Court.
The decision provides the necessary funds for the company, which was in dire straits with just $4 million in cash.
“Today’s approval of our requested Day 1 relief is a positive step forward for the Group and our restructuring efforts,” said CEO Mooky Greidinger. “As we position Cineworld for long-term growth through this Chapter 11 process and beyond, we remain unwavering in our commitment to providing our guests with the most memorable cinema experience and to maintaining our longstanding relationships with our business partners.”
Cineworld, with 747 theaters and 9,139 screens worldwide, filed on Wednesday for Chapter 11 in the Southern District of Texas and announced a so-called DIP, or debtor-in-possession, loan from a consortium of creditors to keep operating while it cleans up. his balance.
The consent and approval of Judge Marvin Isgur came at almost midnight yesterday after hearings that began in the morning and continued throughout the day. At the end of the hearing, the judge noted that the DIP deal would allow Cineworld to continue operating. Without him, “this business would be closed.”
The original debt holder funding proposal has been adjusted: $1 billion of the total amount earmarked for refinancing loans pending petition from the same group of debt holders is now placed in escrow before the challenge period expires.
Cineworld, which ran up debt from its 2018 acquisition of Regal, has been hit by Covid theater closures, low attendance and the studios’ temperamental release schedules. Cineplex of Canada’s $1.24 billion judgment against him is pending, with a hearing scheduled for October. The surge in admissions earlier this year was promising, but at the end of the summer the tent poles dried up and the chain moved on to chapter 11.