# Cineworld Group secures new debt facility of $450m share price up over 17%

- Link: https://www.directorstalkinterviews.com/cineworld-group-secures-new-debt-facility-of-450m-share-price-up-over-17/412940581
- Published: 2020-11-23T09:14:18+00:00
- Author: Giles

**Significant Additional Liquidity Secured**

**Cineworld Group plc** (LON:CINE) has announced it has secured significant additional
liquidity whilst implementing further operational measures to deliver enhanced profitability
over the long term:

·      _Secured a new debt facility of $450m and issue of equity warrants_

·      _Agreed bank covenant waivers until June 2022_

·      _Extended maturity of the $111m incremental RCF from December 2020 to May
2024_

·      _Accelerated tax year closure to bring forward an expected tax refund of 
over $200m to early 2021_

Shares in Cineworld Group were up over 17% on the new at the time of writing.

Cineworld believes that together these steps will provide the Group with financial
and operational flexibility until lockdown restrictions in key jurisdictions are
eased and studios are able to bring their enhanced pipeline of major releases back
to the big screen.

> **Alicja Kornasiewicz, Chair of Cineworld Group plc, commented:**
> “In light of the severe financial challenges facing the Group arising from the
> significant disruption to the entire industry, the Board is confident this additional
> liquidity will preserve and maximise shareholder value over the long term.”

> **Mooky Greidinger, CEO of Cineworld Group, commented:**
> “The measures we are announcing today deliver over $750m of extra liquidity to
> support our business. Over the long term, the operational improvements we have
> put in place since the start of the pandemic will further enhance Cineworld’s 
> profitability and resilience. The Group continues to monitor developments in the
> relevant markets in which we operate and our entire team is focused on managing
> our cost base. We look forward to resuming our operations and welcoming movie 
> fans around the world back to the big screen for an exciting and full slate of
> films in 2021.”

**New ****Debt Facility**** and ****Issue**** of ****Equity Warrants**

The Group has agreed the terms of a new $450m 3 year non-call facility, which matures
on 23 May 2024. After accounting for the New Debt Facility, the Group will have 
aggregate gross debt financing of $4.9bn with a weighted average interest rate of
approximately 4.5%. The New Debt Facility also includes certain financial and operating
covenants and entitles the lenders to appoint a board observer. 

Alongside the New Debt Facility, the Company will issue to participating lenders
153,539,786 equity warrants representing in aggregate 9.99% of the fully diluted
ordinary share capital of the Company assuming full exercise of the warrants.  Further
details are set out below.

**Covenant ****Waivers**** and ****Extension**** of the $111m ****Incremental****
RCF**

We are also pleased to have agreed with our relationship banks:

·      A waiver of all bank financial covenants until June 2022; and   

·      An extension of maturity of the $111m incremental RCF from December 2020 
to May 2024.

**F****urther Operational Cost Savings**

The Group has implemented actions to mitigate the impact of closure of cinemas across
its estate, whilst prioritising the welfare of our employees, customers and other
stakeholders.

The Group has agreed certain material abatements and long term rent deferrals with
key landlords, in conjunction with new lease agreements in some circumstances and
discussions are continuing in relation to other potential abatements and deferrals.
In addition, all new Capex programmes are currently on hold.

These actions, together with a number of other operational initiatives, has meant
the Group has successfully reduced its monthly cash expenditures to approximately
$60m whilst cinemas are closed.

Given the uncertainty of the duration of the Covid pandemic, the Group has worked
with its financial advisors to plan for multiple scenarios. The Group base case 
scenario assumes a reopening of cinemas no later than May 2021. Under this base 
case scenario, the Group has sufficient headroom for 2021 and beyond. In the event
of a further delay to the cinema reopening, the Group expects to retain sufficient
liquidity for a number of additional months, but may require lender support in order
to deploy that liquidity.

Despite the success of these cost saving actions and the other measures announced
today, the Group will continue to consider all options to ensure that its business
remains viable in light of the uncertainties regarding the duration of the Covid
pandemic and its potential impact on medium-term operating restrictions and the 
content pipeline. These options will include determining how the proceeds of the
financing announced today should best be utilised by the US and UK businesses and
the relevant subsidiaries within the Group, and continuing discussions with landlords
across the Group’s estate and other key stakeholders to manage costs.

**Further details of the Equity Warrants**

The warrants will not be listed but will be tradeable. For a period of two years,
if the Company issues equity securities at below 80.65 pence per security and that
issue is at a discount to the then market price (or 46.09 pence per security if 
lower), the terms of each warrant will be adjusted so that each warrant holder would
maintain the same pro rata equity interest in the Company as immediately prior to
the relevant issue of securities. The warrants also benefit from customary anti-
dilution protections in the case of other corporate actions. The warrants represent
11.18% of the Company’s current issued share capital.

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