World’s second-largest cinema chain Cineworld shares collapse in brewing bankruptcy filing

In 2020, as the world battled the pandemic, Cineworld struggled to survive a coronavirus slump in filmmaking and cinema as the lockdown kept viewers out. —Photo Reuters

Saturday August 20, 2022 09:45 MYT

NEW YORK, August 20 – Cineworld Group, the world’s second-largest operator of cinema chains, is preparing to file for bankruptcy, the the wall street journal (WSJ) reported yesterday, just days after warning that a lack of blockbusters would affect its short-term liquidity.

Cineworld declined to comment on the WSJ report.

Shares of the London-listed company fell more than 81% to a record high of 1.8 pence after the WSJ said Cineworld should file a Chapter 11 petition in the US and is also considering a insolvency proceedings in the UK.

In 2020, as the world battled the pandemic, Cineworld struggled to survive a coronavirus slump in filmmaking and cinema as the lockdown kept viewers out.

The company, which operates under the Cinema City, Picturehouse, Regal and Yes Planet brands, has experienced a shortage of big-budget films that has reduced admissions and reduced the chances of rebounding from the pandemic.

Cinema chain operators have seen a downfall as audiences have become addicted to streaming movies at home.

“We have nothing to add beyond the statement we made on Wednesday,” a company spokesperson said.

Net debt stood at US$8.9 billion (RM39.8 billion), including lease liabilities of US$4.84 million, at the end of 2021, with cash and cash affected by US$354.3 million.

Cineworld also faces payment obligations to former shareholders of its US division Regal and a potential multi-million dollar fine in a dispute with Canada’s Cineplex.

Refinitiv’s calculations give Cineworld a combined credit rating of 1, indicating that it is very likely to default next year.

Cineworld has hired attorneys from Kirkland & Ellis LLP and consultants from AlixPartners to advise them on the bankruptcy process, the WSJ said, citing unidentified people familiar with the matter.

AlixPartners declined to comment, while Kirkland & Ellis LLP did not immediately respond to a request for comment.

Cineworld said Wednesday it was in talks about potential financing or a restructuring of its balance sheet, but noted the risk to shareholders of a “very significant dilution” of their interests. —Reuters

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