Cineworld confirms it is looking at filing for bankruptcy in US
Chain, which accumulated £4bn debt in pandemic, says cinemas would stay open and staff be unaffected
Cineworld has confirmed it is considering filing for bankruptcy in the US after accumulating £4bn in debt during the coronavirus pandemic but assured moviegoers and staff that its cinemas would continue operating even as it tries to restructure its balance sheet.
The world’s second-largest cinema chain has struggled after failing to experience a quick enough recovery in the wake of the Covid-19 outbreak, which forced most of its sites to close during lockdowns. It reported a $708m (£598m) loss last year, and accumulated $4.8bn (£4bn) in debts while cinemas were shut.
Cineworld has also been grappling with the financial fallout of its abandoned takeover of the rival chain Cineplex. The decision to pull out of the deal means the company is now facing a $1bn payout to the Canadian firm.
It emerged last week that Cineworld, which operates 751 sites in 10 countries, had hired lawyers from Kirkland & Ellis, and consultants from the restructuring experts AlixPartners, to advise on how to manage its soaring debts.
On Monday, Cineworld confirmed it was considering a number of “strategic options” including filing for chapter 11 bankruptcy in the US and similar proceedings in other jurisdictions. The company said it was in discussions with major stakeholders including its lenders, as well as their legal and financial advisers about its options.
However, the troubled cinema chain said its Cineworld and Regal cinemas were “open for business as usual and continue to welcome guests and members”, adding that its 45,000 global staff, including 5,000 employees in the UK, would not be affected by the proceedings.
“Cineworld would expect to maintain its operations in the ordinary course until and following any filing and ultimately to continue its business over the longer term with no significant impact upon its employees,” the company said on Monday.
However, any attempt to reduce its debt could result in a “very significant” dilution of shares for its investors. Cineworld’s UK-listed shares were up 0.8% in morning trading.
The world’s second-largest cinema chain has struggled after failing to experience a quick enough recovery in the wake of the Covid-19 outbreak, which forced most of its sites to close during lockdowns. It reported a $708m (£598m) loss last year, and accumulated $4.8bn (£4bn) in debts while cinemas were shut.
Cineworld has also been grappling with the financial fallout of its abandoned takeover of the rival chain Cineplex. The decision to pull out of the deal means the company is now facing a $1bn payout to the Canadian firm.
It emerged last week that Cineworld, which operates 751 sites in 10 countries, had hired lawyers from Kirkland & Ellis, and consultants from the restructuring experts AlixPartners, to advise on how to manage its soaring debts.
On Monday, Cineworld confirmed it was considering a number of “strategic options” including filing for chapter 11 bankruptcy in the US and similar proceedings in other jurisdictions. The company said it was in discussions with major stakeholders including its lenders, as well as their legal and financial advisers about its options.
However, the troubled cinema chain said its Cineworld and Regal cinemas were “open for business as usual and continue to welcome guests and members”, adding that its 45,000 global staff, including 5,000 employees in the UK, would not be affected by the proceedings.
“Cineworld would expect to maintain its operations in the ordinary course until and following any filing and ultimately to continue its business over the longer term with no significant impact upon its employees,” the company said on Monday.
However, any attempt to reduce its debt could result in a “very significant” dilution of shares for its investors. Cineworld’s UK-listed shares were up 0.8% in morning trading.