Cineworld Group PLC (LSE:CINE) shares dropped 16% in early trading after its third amended joint chapter 11 plan of reorganisation was confirmed in the US bankruptcy court in Houston, Texas.
This "paves the way", the Anglo-US cinema group said, for it to implement its restructuring transaction plans, which include the release of around US$4.5bn of the debt, a fully backstopped rights issue to raise gross US$800mln and US$1.46bn in new debt financing.
But the owner of the Picturehouse and Regal chains said earlier this week that it still plans to place itself into administration in the UK.
And also as previously announced, given the level of existing debt that is proposed to be released under the plan, it does not expect any recovery for shareholders.
"The confirmation of our plan of reorganisation is a significant milestone as Cineworld moves towards emerging from this process in a strong financial position and with a more resilient capital structure," said chief executive Mooky Greidinger.
Under the chapter 11 plan, a newly incorporated company will become the sole owner of the group, including the appointment of former Pepsi boss Eric Foss as chairman.
The company understands that the selection of additional NewCo board members is ongoing.