Shares of giant UK exhibitor Cineworld soared 23% Thursday as it confirmed plans to open theaters in July when it currently expects restrictions on cinemas will be lifted in each of its territories, and said that it anticipates a cash infusion from government COVID-19 relief programs in the UK and U.S. along with new loans.
“Subject to this [restrictions being lifted] and confirmation of the schedule for film releases, Cineworld anticipates the reopening of all of its cinemas in July. Cineworld has put in place procedures to ensure a safe and enjoyable cinema experience for its employees and customers,” the parent of U.S. chain Regal said Thursday. “Cineworld is excited by the great movie line up to follow the reopening of cinemas, starting with the highly anticipated new Chris Nolan movie Tenet and immediately after that with” Disney’s Mulan.
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“Cineworld, as always, greatly believes in the theatrical experience and is fully committed to be the best place to watch a movie,” it added. Controversy over shifts in studio windowing patterns during the pandemic and what will come after exploded with Universal’s Trolls World Tour — released directly to consumers’ homes through video-on-demand — and continues to simmer.
Separately, cash-strapped Cineworld whose theaters have been shuttered since March, announced some financial relief in the form of a deal with lenders and a liquidity injection. The chain said lenders have agreed to waive the leverage covenant for its credit facility for a June test date and given it added flexibility going forward for December. Loans can require companies to maintain a certain debt to cash flow ratio to keep a loan in good standing and lenders conduct period reviews to make sure they are in line.
The group has also agreed to the terms of $110 million of additional liquidity through an increase in its revolving credit facility; secured credit committee approval to apply for an additional $45 million through the CLBILS loan scheme in the UK; and expects shortly to commence a process to access $25 million through the U.S. government CARES Act.
Cineworld expects that this additional liquidity, to the extent required, will provide it with sufficient headroom to stay afloat even in the unlikely event cinemas remain closed until the end of the year.
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