National CineMedia Files for Chapter 11 Bankruptcy

Georg Szalai
Updated ·2 min read

Movie theater advertising giant National CineMedia has filed for Chapter 11 bankruptcy protection and struck a debt restructuring deal with lenders to “meaningfully strengthen the company’s balance sheet and position the company for long-term growth,” the firm said late on Tuesday.

It filed a voluntary Chapter 11 petition in the U.S. District Court in the Southern District of Texas.

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The news comes after Regal owner Cineworld, the world’s second-largest exhibitor, filed for U.S. bankruptcy protection in September and formally filed its reorganization plan at the start of this week with the goal to emerge from bankruptcy protection by mid-year.

National CineMedia’s business was hit by the shutdown of cinemas due to the COVID pandemic, followed by the slow industry recovery since the reopening of theaters and advertising being affected by macro-economic clouds. The company missed an interest payment in mid-February, leading to several extensions of the grace period before Tuesday’s Chapter 11 filing. It had also stopped a quarterly dividend to conserve cash.

The restructuring calls for all of the company’s debt to be converted into equity. National CineMedia listed its assets as being worth $500 million-$1 billion, while its liabilities amount to $1 billion-$10 billion.

Under its deal with lenders, National CineMedia said it would “assume all of its critical contracts upon emergence (from Chapter 11), ensuring that the company will maintain the largest national cinema advertising network.”

The restructuring agreement “will position us to deliver the strong results our advertisers and cinema partners have come to expect from us today and well into the future,” said National CineMedia 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 swiftly and responsibly emerge as a stronger company.” The firm also highlighted its goal “to quickly emerge (from Chapter 11) without disrupting” operations or customer relationships.

Exhibitor AMC Theatres on Monday disclosed the acquisition of shares in the cinema advertising firm. A regulatory filing showed its stake amounting to 9.1 percent. Reuters reported that AMC was now the second-largest shareholder of National CineMedia.

B. Riley Financial analyst Eric Wold dropped coverage of National CineMedia’s stock, which has been trading in the territory of pennies, in mid-March. “Management confirmed that National CineMedia had secured upfront ad commitments of around 85 percent of the average upfront revenues generated between 2017-2019,” he wrote in his final report. “While there remains some uncertainty around the economy, supply chain and recovery pace of the exhibition industry, we believe this commitment level from major advertisers (at flattish CPMs versus 2019 levels) demonstrated the attractiveness of in-theater advertising to reach key demographics with advertisements that cannot be ‘skipped’ by consumers.”

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