READING INTERNATIONAL INC

RCES

Our Financing Strategy

In 2023, due to the negative operating conditions caused by the 2023 Hollywood Strikes and increased interest rates, as well as the lingering impacts from the COVID-19 pandemic, we (i) conserved our cash and chose to defer non-essential capital expenditures, (ii) refinanced our existing debt to provide longer maturity dates and eased financial covenants and/or obtained waivers of financial ratio tests and (iii) monetized one non-core asset and identified certain other assets as candidates for potential monetization to raise additional liquidity. In February, we sold an additional asset, our underutilized administrative office building in Culver City, California, to take advantage of a tenant friendly office market in Los Angeles.

During 2023, our bank loans with Bank of America, NAB, and Westpac required that our Company comply with certain covenants. We either complied with the underlying bank covenants or obtained waivers from compliance. In 2023, we drew down on our 44 Union Square debt facility to provide financing for tenant improvements for our tenant at 44 Union Square, Petco who opened its flagship store in June 2023, and to pay brokerage fees associated with that lease.

If our Company is unable to generate sufficient cash flow in the upcoming months or if its cash needs exceed our Company’s borrowing capacity under its available facilities, we could be required to adopt one or more alternatives, such as reducing, delaying or eliminating planned capital expenditures, selling additional assets, or further restructuring debt.

Generally speaking, we believe our relationship with our lenders is good.

For more information about our borrowings, including loan modifications and modifications to waivers of certain covenants, please refer to Part II, Item 8 – Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements-- Note 12 – Borrowings.

The table below presents the changes in our total available resources (cash and borrowings), debt-to-equity ratio, working capital, and other relevant information addressing our liquidity for the last five years:

(1)This relates to the construction facilities specifically negotiated for 44 Union Square redevelopment project.

(2)Typically, our working capital is reported as a deficit, as we receive revenue from our cinema business ahead of the time that we have to pay our associated liabilities. We use the money we receive to pay down our borrowings in the first instance.

We endeavor to manage our cash, investments, and capital structure to meet the short-term and long-term obligations of our business, while maintaining financial flexibility and liquidity. We forecast, analyze, and monitor our cash flows to enable investment and financing within the overall constraints of our financial strategy. In the past, we used cash generated from operations and other excess cash to the extent not needed for any capital expenditures, to pay down our loans and credit facilities providing us some flexibility on our available loan facilities for future use and thereby, reducing interest charges. To meet our liquidity’s need, in 2023, we have worked with our lenders to extend the maturity of various loans.

Refer to Part II, Item 8 – Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements-- Note 12 – Borrowings for further details on our various borrowing arrangements.

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On December 31, 2023, our consolidated cash and cash equivalents totaled $12.9 million. Of this amount, $7.1 million, $5.2 million and $0.7 million were held by our U.S., Australian and New Zealand operations, respectively. The funds held in Australia and New Zealand are, under our applicable bank lending arrangement, subject to limitations on their use outside of Australia or New Zealand as applicable. Due to the impact of the COVID-19 pandemic and continuing funding needs in the US, we no longer intend to indefinitely reinvest offshore any earnings derived from our Australian and New Zealand operations.

We have historically funded our working capital requirements, capital expenditures and investments in individual properties primarily from a combination of internally generated cash flows and debt. During 2023, the need for such funding for capital expenditures and investments has decreased, as we have deferred to the fullest extent reasonable such expenditures. However, due to the Hollywood Strikes and the increase in interest rates, our operating income is still insufficient to cover our costs and expenses accordingly, our negative working capital has increased over the course of the year. The funding that has been required, has been funded predominantly from cost reductions, debt and strategic asset sales and landlord concessions. As noted in the preceding table, we had no unused available unrestricted corporate credit facilities at December 31, 2023.

The change in cash and cash equivalents for the three years ended December 31, 2023 is as follows:

Operating Activities

Cash used in operating activities for 2023 decreased by $16.6 million, to cash used of $9.7 million, driven by a $14.8 million decrease in net changes in operating assets and liabilities primarily resulting from taxes payable, film rent payable, and prepaid and other assets, plus better operating result comparing to prior year.

Investing Activities

Cash used in investing activities during the twelve months ended December 31, 2023 decreased by $6.8 million, to cash used of $2.7 million. This is mainly due to delay in CAPEX spending, and the sale of our Maitland property in Australia in the fourth quarter of 2023.

Financing Activities

Cash used in financing activities for the twelve months ended December 31, 2023, decreased by $9.9 million, to $6.7 million due to reduced debt payment compared to prior year, plus $4.1 million draws on our loan with Emerald Creek Capital.

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CONTRACTUAL OBLIGATIONS, COMMITMENTS AND CONTINGEN