Cineworld PLC has agreed on a short term solution to its debt woes worth $450m (£336m) to see it through the Covid 19 pandemic. The company is also reported to have accessed liquidity in the form of £233m cash to free up some financial support.
The stock market showed the shares rise instantly as a result as this debt won’t be called in for at least 3-4 years till 2024. Mooky Greidinger, chief executive of Cineworld, 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.
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.
No word on if this now stops any CVA restructures of proposals to creditors that we reported upon last week. The expectation is that now that the company has cash available it may hinder any rental reductions to Landlords, two of which are currently suing the company for unpaid rent.
Cineworld PLC might be able to make it through 2020 thanks to this new deal
The company has also announced an extension to its current revolving credit arrangement of $83m which was due to expire next month till May 2024. Evidently, creditors feel that in light of the recent vaccine news extending agreements to the company to aid its survival in the short term will mean they stand a greater chance of repayment long term.
With a string of blockbusters ready to go from March onwards should the situation worldwide improve the company is in good stead to recompense from it. The issues remain the high amount of debt (in the billions) within the company, a company that has very little assets in the U.K. with most units rented.
Pressure will be mounting on the CEO to reduce these debts and return the company to a sustainable level. What today’s agreements mean for the future of the company (short term) is positive, however, restructure and cutting costs are inevitable.
What do you make of this news? Are you worried at all about the current state of Cineworld PLC? Let us know your thoughts in the comments below.
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