Royal parent company Cineworld said it has opted to sell assets and the process is “well underway” with non-binding bids due February 16.
The company said in a bankruptcy filing that it has contacted 30 “potential transaction parties,” many of them competitors. If the debtors (Cineworld and its affiliates) find that one or more of the bids “is a potential value-maximizing proposition, a second phase of the process will begin with the submission of binding bids.”
British Cineworld filed for Chapter 11 bankruptcy in September in the Southern District of Texas bankruptcy court. It announced early this month that it had embarked on a marketing journey to find a strategic or financial buyer. A reorganization was also an option, but the company said it had not yet received a response to a restructuring proposal made to the Ad Hoc Group on December 1. said the application this week.
An ad hoc group in bankruptcy is a committee of creditors or bondholders that unite to pursue claims.
Cineworld said the process comes as it has managed to “successfully stabilize operations and maintain market share” despite box office receipts falling short of industry-wide projections.
It also stressed with some heat that it and only leads the sales process, warning interested parties not to try any deals behind the company’s back.
“There will be no back door… Certain outreach parties, including two competitors, have attempted to contact the Ad Hoc Group or certain lenders directly in an attempt to undermine the accounts receivable process. This will not happen or be tolerated. The Debtors will facilitate the discussions between the Ad Hoc Group and the Outreach Parties where necessary and appropriate at the right time. But it is the debtors, not the ad hoc group or an individual lender, who will lead the marketing process. This process will not be undermined.”
It said the ad hoc group and committee are in full agreement with this.
Cineworld could be referring to AMC Entertainment, which last month said it was in talks with Cineworld backers about acquiring assets from Regal – though those talks ended. Following AMC’s statement, Cineworld clarified that neither it nor its advisors have participated in discussions with AMC regarding the sale of any of its cinemas. It also said it would not sell any of its assets separately.
AMC is struggling with its own financial problems. Today it filed with the SEC that it had amended a 2013 credit agreement to extend the suspension of the loan covenant by one year until March 31, 2024. The shares, which fell 3%, rose slightly in after-hours trading.