Cineworld Group, the world’s second largest cinema chain operator, is preparing to file for bankruptcy, the Wall Street Journal reported on Friday, just days after warning that a lack of blockbusters would hit its liquidity in the near term. Cineworld declined to comment on the WSJ report.
Shares in the London-listed company slumped more than 81% to a record low of 1.8 pence after the WSJ said https://on.wsj.com/3ChgqOc Cineworld is expected to file a Chapter 11 petition in the United States and is also considering insolvency proceedings in the UK. In 2020, when the world was combating the pandemic, Cineworld battled to survive a coronavirus collapse in film-making and cinema-going as the lockdown kept viewers away from stepping out.
The company, which operates under Cinema City, Picturehouse, Regal and Yes Planet brands, has seen a shortage of big-budget films which has reduced admissions and cut the chances of a bounce back from the pandemic-lows. Cinema chain operators have seen a downfall as audiences have become addicted to streaming movies at home.
“We don’t have anything to add beyond the statement we made on Wednesday,” a spokesperson for the company said. Net debt stood at $8.9 billion, including lease liabilities of $4.84 million, at the end of 2021, with cash and restricted cash of $354.3 million.
Cineworld is also facing payment obligations to former shareholders of its U.S. division Regal and a potential multimillion-dollar fine in a dispute with Canada’s Cineplex . Refinitiv calculations assign Cineworld a combined credit score of 1, indicating it is highly likely to default in the next year.
Cineworld has engaged lawyers from Kirkland & Ellis LLP and consultants from AlixPartners to advise 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 on Wednesday it was in talks over potential funding or a restructuring of its balance sheet, but noted the risk to shareholders of a “very significant dilution” of their interests. Devdiscourse