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Cineworld granted exercise of redemption rights in National CineMedia
Chicago, Dec. 23 – Cineworld Group plc was granted relief in the form of authorization to exercise its contractual redemption rights in National CineMedia, LLC, according to a motion filed with the U.S. Bankruptcy Court for the Southern District of Texas.
As reported earlier in the week, Cineworld’s Regal entities have the unilateral right to redeem their existing equity interests in National CineMedia for either cash or stock at National CineMedia’s option.
Likely, the redemption rights will be honored with stock, based on a limited objection filed by National CineMedia.
In the limited objection, National CineMedia points out that because Cineworld has been in receipt of material non-public information regarding National CineMedia and then will be receiving NCM shares, there is a chance that Cineworld, if it were to move to resell those shares with their previous knowledge of material non-public information, could run afoul of certain securities laws.
National CineMedia said Cineworld needs to acknowledge the risk and take on the liability, including all potential defense costs, if problems arise.
At the hearing, the judge incorporated the objection into the final order so that he could sign off on the exercise of the redemption rights.
Also at the hearing, there was testimony that a tax professional analyzed the available information and estimated that the potential tax savings for Cineworld will be around $4 million to $5 million as a result of the exercise of the redemption rights.
The hearing was held Friday morning by Zoom, as the judge was in quarantine.
Cineworld is a London-based cinema operator. The company filed bankruptcy on Sept. 7 under Chapter 11 case number 22-90168.
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