Cineworld Group PLC (LSE:CINE), said it has not held talks with AMC Entertainment Holdings (NYSE:AMC) Inc. regarding the sale of its cinema assets, as it warned that any transaction would result in a “very significant dilution of existing equity interests”.
The beleaguered cinema chain which filed for chapter 11 bankruptcy protection in September was responding to recent claims by AMC that it had held talks with its lenders with a view to buy some of Cineworld’s cinema assets.
“Cineworld also understands that neither the ad hoc group of lenders under the group's 2018 credit facility nor its advisers were party to discussions with AMC,” the company said in a statement.
Cineworld said talks continue with key stakeholders to develop a proposed plan that seeks to maximise value for the benefit of moviegoers and all other stakeholders and these discussions are ongoing.
“In parallel with developing a plan to restructure the group's capital structure, the company will also run a marketing process in pursuit of a value maximizing transaction for the group's assets, focused on proposals for the group as a whole,” it said.
Proposals are set to be made to potential suitors in January 2023, the group stated.
But Cineworld stressed it “has not initiated and does not intend to initiate a separate marketing process for the sale of any of its assets on an individual basis”.
Any sale transaction for the group as a whole would not include the sale of Cineworld itself and would therefore not be subject to the rules of the Takeover Code, the company added.
But it warned any restructuring or sale transaction agreed with stakeholders will result in a “very significant dilution of existing equity interests in Cineworld and there is no guarantee of any recovery for holders of Cineworld's existing equity interests”.