Cineworld Group PLC (LSE:CINE) shares tumbled over 20% after the ailing cinema chain announced a debt restructuring package with its biggest lenders after failing to find a buyer for its UK and US businesses.
Under the proposals, which are aimed at helping bring the firm out of Chapter 11 bankruptcy proceedings, lenders will reduce the debt pile by US$4.5bn and receive equity in the reorganised group, provide new debt of US$1.5bn and backstop an US$800mln equity rights issue. Existing shareholders are likely to get nothing.
Cineworld said it had dropped plans to sell its businesses in the US, UK and Ireland in the absence of "an all-cash bid significantly in excess of the value established under the proposed restructuring". It said it is continuing to look at offers for its Rest of the World business.
But “as previously announced, it is not expected that any sale transaction would provide any recovery for holders of the company's equity interests”, Cineworld said.
Chief executive Mooky Greidinger said: "This agreement with our lenders represents a 'vote-of-confidence' in our business and significantly advances Cineworld towards achieving its long-term strategy in a changing entertainment environment."
The company entered Chapter 11 in September, weighed down by US$8.8bn in debt and lease liabilities.
Shares in Cineworld fell 21% to 2.29p in London in early exchanges on Monday.