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Cineworld stock soars upon reaching bankruptcy settlement with lenders

Yahoo Finance Live examines Cineworld shares as it wraps up its bankruptcy settlement with lenders.

Video transcript

RACHELLE AKUFFO: Now, Cineworld is my pick, Cineworld Group. Now the stock is the world's second largest movie theater chain operator. And it's been skyrocketing. It was more than 200% around noon, currently down just below that, about 195% up for the day. Now that's after announcing Monday, it reached a Chapter 11 bankruptcy settlement with landlords and lenders. Now this paves the way for the company to borrow an additional $150 million and make a $1 billion debt repayment.

Now to reach this deal, Cineworld agreed to pay at least $20 million in rent that will accrue after September 30, also explore a potential sale of the business, and allow input from creditors on its business plan going forward. Now the bankruptcy judge overseeing the case called the agreement a, quote, "pretty amazing result," given more than a dozen objections to that loan at the start of the case.

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Now short sellers having a field day betting against the stock in meme stock-like fashion. Now even with today's rally, though, the stock is down more than 70% year to date, as it failed to recover from COVID-related lockdowns, and of course, debt tied to its $3.6 billion purchase of Regal back in 2018, Seana.

SEANA SMITH: Yeah, certainly a step in the right direction, but it will be interesting to see, I guess, how this all plays out for Cineworld.