Regal Cinemas' owner Cineworld secures lifeline to stay afloat during pandemic
Deal follows AMC Theaters move as movie business fights to stay alive
The movie theater industry continues to try and fight the financial impact of the coronavirus pandemic, with Cineworld the latest chain of exhibitors to seek and secure more cash to stay afloat.
Cineworld is the world's second-largest theater exhibitor and the owner of the popular Regal Cinemas in the United States. Due to the pandemic causing studios to delay the release dates of new films audiences have been being skittish about attending theaters and almost all of Regal's locations were closed earlier this year.
In an announcement shared with Fox Business, the company revealed Monday that it has secured a $450 million debt facility and is strategizing to implement $750 million of extra liquidity to support the business in the long term.
The release also notes that there are plans to waive bank covenant waivers until June 2022, extend the maturity of the $111 million incremental revolving credit facility from Dec. 2020 until May 2024 and to accelerated tax year closure to bring an expected $200 million tax refund in early 2021.
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People visiting the Regal Cinema in New York City. It is a UK based cinema chain. (iStock)
“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," Cineworld CEO Mooky Greidinger said in a statement, "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."
Alicja Kornasiewicz, Chair of Cineworld Group, added: “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."
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Cineworld's move comes four months after the world's largest theater chain, AMC Entertainment, reached a deal with investors to pump $300 million of cash into the chain and slash more than $600 million in debt from AMC's ledgers.
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For Regal, the announcement comes as welcomed news after it was forced to shutter most of its remaining theater locations in New York and California earlier this month after closing the remainder of the country and the U.K. in September.
In a statement to FOX Business at the time, a spokesperson for Regal said: "In line with our previously announced strategy, Regal is temporarily suspending operations end of day Thursday at the remainder of our theatres in New York State and California until the public health and operational environment allows for the resumption of a full release slate. This change affects a very limited number of our theatres, which we had kept open following the delayed approval of theatre reopenings in their markets and in line with our wish to allow more of our customers to see Tenet on the big screen."
The release date of 'Dune' was pushed back due to the coronavirus pandemic. (Chia Bella James/Warner Bros. Entertainment via AP)
The coronavirus pandemic has forced many studios to make the harsh decision to push back the release of major titles like “The Batman,” “Dune,” “No Time to Die” and “Black Widow,” all of which were expected to be major box office draws prior to the pandemic.
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Studios in search of revenue with theaters close are also moving some films move to streaming platforms for at home viewing. Just last week AT&T-owned Warner Bros announced that after moving its highly anticipated sequel, "Wonder Woman 1984" twice, it would open the movie in whatever theaters are open on Dec. 25 but also present it on the company's owned streaming platform, HBOMax.
Although new films are being released weekly in theaters where open, theaters continue to struggle and have been desperate for government assistance and a steady stream of blockbusters to populate their screens.