Cineworld gets cash boost, targets July to reopen theatres

(Reuters) - Cineworld CINE.L said on Thursday it expects to reopen all its cinemas in July as it secured an extra $110 million (89.63 million pounds) from lenders and a waiver on loan covenants to help it survive coronavirus lockdowns that have crippled business.

FILE PHOTO: A Cineworld cinema logo is pictured in Canary Wharf in London, Britain, March 11, 2020. REUTERS/Keith Weir/File Photo

The company’s shares surged more than 20% as the liquidity boost is expected to provide some relief to Cineworld, which is saddled with a $3.5 billion debt.

The company has also secured credit committee approval to apply for an extra $45 million through a coronavirus borrowing scheme in the UK and expects to start a process to access $25 million through the U.S. government CARES Act.

Cineworld said it expects this additional liquidity to provide it with sufficient headroom even in the unlikely event cinemas remain closed until the end of the year.

The company had said in March it could fail to meet its debt commitments if its cinemas were shut for up to three months.

The London-listed company, which operates about 9,500 screens globally with more than 7,000 in the United States, expects that government restrictions related to cinemas will be lifted in all its territories by July.

U.S. cinema operators, including AMC Entertainment AMC.N, also expect to reopen their theatres in July.

However, Cineworld did not provide any update on its proposed takeover of Canadian rival Cineplex CGX.TO, which would make it the biggest cinema operator in North America.

“We initially liked the Cineplex deal financially and strategically. Things have changed. The Cineplex deal would lead to a higher rate of monthly cash but no additional liquidity, so the deal now looks short-term unattractive,” Jefferies analysts said.

Cineworld said it looked forward to the release of Christopher Nolan’s new movie “Tenet” and Disney’s “Mulan”, following the reopening of its cinemas.

Reporting by Tanishaa Nadkar in Bengaluru; Editing by Ramakrishnan M.