Cineworld to exit bankruptcy in first half, shareholders to be wiped out
Sharecast
Published Feb 24, 2023 08:41
Cineworld to exit bankruptcy in first half, shareholders to be wiped out
Sharecast - The company said it was reviewing the proposals with its advisers and key stakeholders but does not expect any transaction to provide recovery for shareholders.
Cineworld filed for Chapter 11 bankruptcy in the US last September. The filing involved businesses in the US, UK and Jersey and Cineworld said the restructuring process was expected to significantly reduce debt and strengthen its balance sheet and liquidity position.
The company said on Friday that it continues to operate its global business and cinemas as usual without interruption and expects to emerge from Chapter 11 cases in the first half of this year.
Although a sale transaction could delay this process, Cineworld said it remains "committed to emerging from the Chapter 11 cases as expeditiously as possible".
At 0835 GMT, the shares were down 31% at 2.72p.
Victoria Scholar, head of investment at Interactive Investor, said: "While the embattled cinema chain looks set to come out of bankruptcy proceedings this year, its shareholders are likely to suffer with little chance of a deal to salvage its equity interests. Last month Cineworld denied media speculation that it had been in discussions over the sale of some of its assets to AMC.
"Cineworld had an extremely tough time during the pandemic. Covid meant that cinemas were closed for many months, Hollywood was unable to churn out hits and consumer preferences shifted towards streaming instead which has caused lasting damage for ticket demand even after movie theatres reopened. On top of that, Sky for example now releases new blockbusters around the same time as the cinemas, again reducing the incentive to leave the house and organise a cinema trip. Plus, Cineworld also had problems of its own with its £700 million damages bill for abandoning its takeover of Cineplex.
"The stock is down over 98% over five years and 90% over the past year, extending losses in today’s session."
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