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National CineMedia Files for Chapter 11 – Deadline




The nation’s largest movie theater advertising network, National CineMedia, said tonight that it has filed a voluntary Chapter 11 petition in the US District Court for the Southern District of Texas – where one of its largest shareholders and customers, Regal parent Cineworld, has just filed a restructuring plan to emerge. from the bankruptcy itself.

Cineworld submitted in September and hopes for approval by the end of May. National Cinemedia’s proceedings should move faster as it has filed a comprehensive restructuring agreement already in place and backed by secured lenders that it says provides “a clear road map … to quickly emerge without disrupting operations or customer relationships.”

The move is not a shock. The company recently missed and then extended the grace period several times on an interest payment originally due in mid-February, prompting a technical default with major rating agencies and fueling speculation about a possible Chapter 11 or out-of-court restructuring. Its auditor had signaled concerns about its ability to continue as a going concern last autumn, and the share price has been reduced to penny stock levels. The business has taken time to recover from the closure of cinemas during Covid and a slow recovery of the box office. Cineworld, as part of the bankruptcy, has sought to cancel or reset a long-term contract between National Cinemedia and Regal.

The agreement means that all the company’s debt must be converted into equity. It will assume critical contracts upon the emergence of Chapter 11, and current management will be maintained to ensure continuity.

“Today’s transactions will position us to deliver the strong results our advertisers and cinema partners expect from us today and well into the future,” said CEO Tom Lesinski. “We are entering this process with the overwhelming support of our secured lenders and key stakeholders, which we expect will enable us to quickly and responsibly emerge as a stronger company.”

Converting all of the company’s funded debt to equity would completely free up the balance sheet. The holding company NCM will have a stake in the restructured company of approximately 14%. Unless an official creditors’ committee is formed, all holders of general unsecured claims will be paid in full in the ordinary course under the RSA. The company will continue to operate with existing cash holdings that provide liquidity.

After the restructuring, it said, “it will be well-positioned as moviegoers welcome the resumption of a regular schedule of major film releases following pandemic interruptions.”

In fact, the move comes as the box office hit a high with last weekend’s release of the super mario bros movie, the biggest opening weekend debut of the year.

The company also submitted a so-called first-day order for approval, including demands to pay employee wages and benefits. It will continue to service its existing customer programs, partnerships and cinema operator relationships in the ordinary course of business.



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