UK's Cineworld gets nod to access about $785 mln financial aid, shares jump

Sept 9 (Reuters) - Movie chain operator Cineworld Plc (CINE.L) said on Friday a U.S. bankruptcy court had granted it access to up to $785 million of an about $1.94 billion financial aid it had secured from existing lenders as part of its Chapter 11 filing.

Cineworld, the world's second-largest cinema chain operator, filed for Chapter 11 bankruptcy protection on Wednesday with less than $4 million in cash on hand read more . The Chapter 11 filing involves Cineworld's U.S., UK and Jersey operations, covering the bulk of its business.

U.S. bankruptcy judge Marvin Isgur in Houston allowed Cineworld to borrow $514 million to fund day-to-day operations and $271 million to buy back the debts owed by its subsidiaries in Poland, Czech Republic, Slovakia, Hungary, Romania, Bulgaria, Ireland, and Israel.

Bankruptcy laws in those countries are less debtor-friendly than U.S. laws, said Steve Zelin of PJT Partners, which acts as Cineworld's investment banker.

People walk past a Cineworld in Leicester Square, amid the coronavirus disease (COVID-19) outbreak in London, Britain, October 4, 2020. REUTERS/Henry Nicholls

Buying the susidiaries' debt would ensure that foreign lenders do not take steps to remove the subsidiaries' management or liquidate their assets, Zelin told Isgur at a Thursday court hearing.

Isgur forced CineWorld to back off a request to borrow $1 billion and immediately use it to repay debts incurred in 2020 and 2021, when it was struggling to survive the COVID-19 pandemic that shuttered theaters for months at a time.

Cineworld will seek approval of that $1 billion loan, plus an additional $150 million earmarked for day-to-day operations, at a future court hearing.

Shares of Cineworld were up 9% at 4.51 pence following the announcement.

The Regal Cinemas parent, which operates more than 9,000 screens across 10 countries and employs around 28,000 people, took on debt to fund part of its $3.6 billion purchase of Regal in 2017, and more to survive the pandemic.

Reporting by Sinchita Mitra in Bengaluru and Dietrich Knauth in New York; editing by Uttaresh.V, Rashmi Aich and Deepa Babington

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