CNWGY - Struggling Cineworld files for bankruptcy amid $5B in debt

Cineworld ( OTCPK:CNNWF ), the global No. 2 movie-theater chain, has filed for bankruptcy in the United States.

The UK-based company filed for Chapter 11 bankruptcy protection in Texas, a move well signaled as the chain wrestled with a debt pile that amounted to $5B and recent box office that has slowed dramatically from a summer spike.

Cineworld has drawn most of its business from the United States ever since it acquired Regal Cinemas, the No. 2 U.S. chain behind AMC Entertainment ( AMC ).

Cineworld and its units enter Chapter 11 with commitments for $1.94B in debtor-in-possession financing, it said.

It doesn't expect the filing to result in any suspension of trading on the London Stock Exchange.

Cineworld also says it anticipates emerging from protection during the first quarter of 2023, and it's "confident that a comprehensive financial restructuring is in the best interests of the Group and its stakeholders, taken as a whole, in the long term."

Still, "it is expected that any de-leveraging transaction will result in very significant dilution of existing equity interests in the Group and there is no guarantee of any recovery for holders of existing equity interests."

Part of its restructuring strategy involve pursuing a "real estate optimization" strategy in the U.S., and it intends to engage in "collaborative discussions" with U.S. landlords to improve cinema lease terms. Heavy cinema leaseholder EPR Properties stock ( EPR ) saw a sudden dip, but has recovered and is positive on the day Wednesday.

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