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Cineworld shares soar as it secures $450m new debt facility lifeline

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A woman holds an umbrella as she walks past a Cineworld in Leicester's Square in London, Britain, October 4, 2020. Photo: Henry Nicholls/Reuters
A woman holds an umbrella as she walks past a Cineworld in Leicester's Square in London, Britain, October 4, 2020. Photo: Henry Nicholls/Reuters

Cineworld (CINE.L) shares climbed as much as fifth on Monday after it announced that it had secured waivers for its debt covenants until June 2022 and $450m (£336m) in new loans to weather the COVID-19 storm.

The cinema chain, which also owns Picturehouse and Regal, said the move 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.”

It will also issue equity warrants worth around 11% of its share capital, adding that its debt measures have given the company over $750m of extra liquidity and reduced monthly cash spend to around $60m.

Cineworld also extended the maturity of its $111m incremental revolving credit facility from December 2020 to May 2024.

Mooky Greidinger, chief executive, said: “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.”

The news sent shares 19.5% higher to 55.08p in early trade.

News of the new lifeline boosted shares on Monday
News of the new lifeline boosted shares on Monday

Last month, Cineworld temporarily closed its doors in the UK and the United States as it battled with the devastation caused by the pandemic. The move affected around 45,000 staff, including cleaners and security personnel.

The industry had also been rattled by a number of blockbuster film delays, such as Marvel’s Black Widow and the latest James Bond film No Time To Die.

The 25th Bond film was initially due to be released in cinemas in April 2020 but was then pushed back until November. Beverly Hills-based MGM, the Hollywood studio behind James Bond, has now postponed the film until April next year.

The film, which cost $250m (£191m) to produce, was forecast to gross more than $1bn worldwide.

READ MORE: No Time To Die 'not for sale' to Apple TV or Netflix, says MGM

Disney’s live-action remake of Mulan also dealt a major blow to Cineworld earlier this year after releasing the film on its streaming service instead of in cinemas.

The film debuted in September at a cost of $29.99 per customer, and only played in theatres in countries that did not have launch plans for Disney+.

The UK Cinema Association, the body representing British cinemas, had called the move “hugely disappointing”, as cinemas continued to battle declining numbers due to the health crisis.

The news also comes after cinema operator Everyman Media Group (EMAN.L) appointed financial advisers last week to help steer it through talks with landlords.

The company, which has a total of 35 sites and still plans to open eight more, has drafted in FTI Consulting to help it in talks during the coming months.

Watch: Cineworld screens AlixPartners for talks on $8bn debt pile

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