National CineMedia files Chapter 11 with debt-for-equity plan

By Sarah Lizee

Olympia, Wash., April 12 – National CineMedia, LLC filed Chapter 11 bankruptcy on Tuesday in the U.S. Bankruptcy Court for the Southern District of Texas to facilitate a restructuring, according to a press release.

National CineMedia, Inc. is not included in the filings and will remain the manager of National CineMedia, LLC.

The debtor entered into a restructuring support agreement with the support of its secured lenders, through which all the company’s debt will be converted into equity of the reorganized company.

The RSA is with some holders of revolving and term loan claims under credit agreements dated June 20, 2018 and Jan. 5, 2022 with JPMorgan Chase Bank, NA as administrative agent, and some holders of 5 7/8% senior secured notes due 2028 and 5¾% senior notes due 2026 with Computershare Trust Co., NA as indenture trustee.

The parties to the RSA hold in total more than two-thirds of all claims arising under the prepetition secured debt documents.

The RSA provides for the distribution of 100% of the newly issued equity interests in reorganized National CineMedia, LLC to holders of claims under the prepetition secured debt documents, with those holders reallocating a portion of the new common units to National CineMedia, Inc. in line with a settlement, subject in each case to dilution.

National CineMedia, Inc. will contribute about $15 million in cash on hand in exchange for new common units.

Unless an official committee of unsecured creditors is formed, all holders of general unsecured claims will be paid in full in the ordinary course. If a creditors’ committee is appointed, holders of unsecured funded debt claims will receive no recovery, or a recovery to be agreed among the required consenting creditors and National CineMedia.

National CineMedia is set to emerge from Chapter 11 without any debt, but if additional exit financing is needed to adequately fund the reorganized entity, National CineMedia will first seek to obtain a revolver from a third-party lender. Otherwise, a first-lien term loan exit facility will be provided by one or more members of the consenting creditors.

The RSA also provides for the consensual use of cash collateral by the requisite parties under the prepetition secured debt documents.

Following the restructuring transactions, National CineMedia, Inc. is projected to have a total ownership interest of about 13.8% of National CineMedia, LLC.

The RSA has certain milestones, including filing a Chapter 11 plan and disclosure statement within 15 days, receiving approval of the disclosure statement within 60 days, receiving confirmation of the plan within 105 days, and emerging from Chapter 11 within 75 days from the confirmation date.

The company filed a series of customary first-day motions to facilitate a smooth transition and to support operations during its case.

In its petition, the company lists 200 to 999 creditors, $500 million to $1 billion in assets and $1 billion to $10 billion in liabilities.

Its largest unsecured creditors are Computer Share Trust, based in Louisville, Ky., with a $238.27 million unsecured notes claim, Cinemark USA Inc., based in Plano, Tex., with a $4.79 million network partner claim, Regal Cinemas, Inc., based in Knoxville, Tenn., with a $4.09 million network partner claim, Red’s Amusement, Inc., based in Scottsdale, Ariz., with a $1.85 million network partner claim and AMC, based in Kansas City, Mo., with a $1.53 million network partner claim.

Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel, Lazard Ltd. is serving as investment banker and FTI Consulting is serving as financial adviser to the company.

National CineMedia is a Centennial, Colo.-based integrated media company. The Chapter 11 case number is 23-90291.

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