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National CineMedia Files Chapter 11, Enters Restructuring Support Agreement

April 13, 2023, 07:51 AM
Filed Under: Advertising

National CineMedia, the largest cinema advertising network in the U.S., announced a series of debt restructuring transactions that are expected to meaningfully strengthen the Company’s balance sheet and position the Company for long-term growth. National CineMedia, Inc., a non-filing entity, will remain the manager of NCM LLC.

To facilitate its debt restructuring, the Company has filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the Southern District of Texas and has entered into a comprehensive Restructuring Support Agreement (RSA) with the support of its secured lenders, through which all of the Company’s debt will be converted into equity of the reorganized Company. Under the RSA, NCM LLC will assume all of its critical contracts upon emergence, ensuring that the Company will maintain the largest national cinema advertising network.

“Our category-defining platform will continue to empower advertisers to reach our sought-after, young moviegoing audiences with scale and measurability. Today’s transactions 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 Tom Lesinski, CEO of NCM Inc. “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 RSA provides a clear roadmap for NCM LLC to quickly emerge without disrupting its operations or customer relationships. Upon confirmation of the restructuring outlined in the RSA, all of NCM LLC’s funded debt would be converted into equity, completely de-levering the Company’s balance sheet. Additionally, NCM Inc.’s management and NCM LLC’s other existing governance structures would be maintained to ensure continuity of ongoing operations and performance. NCM Inc. will receive an ownership interest in the restructured company of approximately 14%. Further, 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.

Nationally Leading Cinema Advertising Network Fully Operational for All Advertisers

NCM LLC will operate its business without disruption and serve the national, regional, and local businesses that rely on its advertising network to reach entertainment fans in and out of movie theaters. The Company’s existing cash balances will provide the liquidity needed to continue operations in the ordinary course of business. Following its restructuring, NCM LLC will be well-positioned as moviegoers enjoy the resumption of a regular schedule for major motion picture releases following pandemic disruption. The cinema industry continues to strengthen with an impressive 26% growth in Q1 2023 vs. Q1 2022. Over 83 million unique moviegoers have attended the theater in 2023, and this past weekend’s release of The Super Mario Bros. Movie was the largest opening weekend debut of the year with $204.6 million at the box office.

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