Shares plunge as debt mountain forces Cineworld into rescue talks
SHARES in Cineworld plunged yesterday after the world’s secondlargest cinema chain warned it was in rescue talks.
It said it needed more cash and was considering a large capital restructuring to save the business.
The company, which is struggling under a mountain of debt, blamed a lack of blockbuster films, despite the success of hits such as Top Gun: Maverick starring Tom Cruise, which grossed over £1bn worldwide.
Cineworld said it was in ‘active discussions with stakeholders’ about its options to obtain additional liquidity and potentially restructure its balance sheet to reduce debt.
It has a £6.9bn debt pile, which became a millstone once Covid hit and forced the closure of theatres around the world. Advisers working on the restructuring include turnaround specialists Alix Partners as well as Kirkland & Ellis, PJT Partners and Slaughter and May.
The biggest shareholders are Global City Holdings, the family investment business of chief executive Mooky Greidinger, with 20.1pc, the Chinese building materials company Jangho Group, with 13.8pc and Polaris Capital Management, with 7.8pc.
The shares fell 60.4pc, or 12.56p, to a record low of 8.24p, meaning they are down 97pc since 2019, with the business now valued at just £137m. The firm operates 9,000 screens in ten countries including the UK, Ireland, Israel and the US.
‘Despite a gradual recovery of demand since reopening in April 2021, recent admission levels have been below expectations,’ Cineworld said. ‘These lower levels are due to a limited film slate that is anticipated to continue until November and are expected to negatively impact trading and the group’s liquidity position in the near term.’
Losses hit £2.5bn in 2020 and the company lost another £478m in the first few months of 2021.
Cineworld is the second UK cinema operator to be hit by the lack of blockbusters. Vue was forced into a £1bn bailout by its lenders in July.