Cineworld Group PLC: Files Chapter 11

The BDC Credit Reporter’s headline of August 22, 2022 said “Cineworld Group PLC: May File Chapter 11″. Now you can scrap the “maybe” because the filing occurred on Wednesday September 7, 2022, as reported by the Wall Street Journal , amongst others. Here are some of the details:

London-based Cineworld has more than $5 billion in debt and faces a roughly $1 billion legal judgment stemming from a soured merger with Canadian cinema chain Cineplex Inc. The chapter 11 proceedings open a path for Cineworld to cut its liabilities through a possible asset sale or financial restructuring as it tries to retain moviegoers who are tempted to stream flicks at home.

Cineworld expects to deleverage its balance sheet while seeking concessions from landlords and continuing its theater operations uninterrupted. The company said Wednesday it has commitments from its lenders for a roughly $1.94 billion loan to carry it through the restructuring process and cover operating expenses.

Cineworld Files for Chapter 11 After Sluggish Ticket Sales- Wall Street Journal – September 7, 2022

We are downgrading Cineworld to CCR 5 from CCR 4. As made clear, though, in our prior article, given the modest amounts of exposure held by Barings BDC (BBDC) and non traded Barings Capital Investment Corp, losses should be minimal. Still, the bankruptcy is likely to result in a temporary interruption of interest received, which amounts to about ($0.400mn) on an annual basis. We doubt, though, that Cineworld will remain under court protection for very long.