- Cineworld has obtained a new debt facility worth $450 million for 3 years, which is supposed to mature in 2024
- The group is also expected to receive tax refunds worth more than $200 million by the next year
- Its operational initiatives will lead to a lower cash outflow of nearly $60 million per month till cinema halls will be closed
Amid the second lockdown restrictions and the continued delay of film releases by the major studios, Cineworld Group plc (LON: CINE), the owner of Regal Cinemas in the US and the second largest exhibitor in the world, has secured financial aid worth $450 million to sail through the pandemic. Founded in 1995, the cinema chain was forced to close 660 cinema halls across the UK and the UK last month as film producers kept postponing releasing the big films.
The company has obtained a new debt facility worth $450 million for a period of three years, which will mature on 23 May 2024. Additionally, it will be issuing 153,539,786 equity warrants which would total up to 9.99 per cent of the company’s average share capital. Taking this new debt facility into account, the company will be having an aggregate gross debt financing for $4.9 billion at an average interest rate of approximately 4.5 per cent.
An extension has been provided to the revolving credit facility for $111 million till May 2024, which was supposed to mature in December. Also, sources within the group said it would receive tax refunds amounting to over $200 million next year.
Keeping the welfare of its customers, employees, and other stakeholders in mind, Cineworld has decided to undertake certain measures to mitigate the impact of closure of cinemas across its properties. It has initiated long-term rent deferral and material abatement agreements with property owners.
Besides, all new capital expenditure programmes have been put on hold. These actions will lead to a reduced cash requirement of nearly $60 million per month till the cinema halls are close.
The FTSE 250 stock is expected to resume its operations in May. The company said it had enough finances to keep it going for the next year. But if the cinema closures are delayed further, it might require further lender support.
DECLINE IN REVENUES
After the leading cinema chain secured more than $750 million of extra funding on 23 November amid the pandemic, the company stock (LON: CINE) witnessed a 19 per cent surge, hitting a 55 pence level at the London Stock Exchange.
On 24 November, the CINE shares were trading at GBX 58.24 at 9:06 AM, moving up by 5.32 per cent as compared to the previous day’s closing price of GBX 55.30. It had a total MCap of £759.16 million. The stock delivered a year-to-date return on price of 74.86 per cent, on the negative side.
Interesting Read: The World of Cinema is History? Cineworld bids adieu, albeit temporarily
The half yearly results of the company, which ended 30 June, were adversely affected due to the pandemic outbreak. The group’s entire sites were closed for many months between April to August. At the time the company released its report, 561 out of 778 sites had reopened, while 217 theatres in Israel, the UK, and the US were closed.
There was a fall in the revenue and adjusted EBITDA of the group was $712.4 million (2019: $2,151.2 million) and $53.0 million (2019: $758.6 million), respectively for the period. An additional liquidity of $360.8 million was also raised by the group.
The film industry and movie theatres were already experiencing significant changes even before the pandemic had struck the world.