Cineworld collapses on the London Stock Exchange, plagued by fears of bankruptcy

(BFM Bourse) – The British cinema chain is about to file for bankruptcy according to the Wall Street Journal. In reaction, the action collapses, losing nearly 60%.

Cineworld would be on the brink. The chain of British cinemas fell by nearly 60% on Friday on the London Stock Exchange after information from the Wall Street Journal assuring that the company “is preparing to file for bankruptcy in the coming weeks”.

Cineworld, weighed down by a disappointing recovery in cinema attendance in the wake of the pandemic, is expected to file for bankruptcy in the United States and plans to open insolvency proceedings also in the United Kingdom, according to the economic daily.

The action of the second largest group of cinemas in the world collapsed by 58.8% to 4.02 pence on the London Stock Exchange around 5:15 p.m. Paris time.

The title had already unscrewed on Wednesday on the prospect of a capital increase which would greatly dilute the value of the shares, and it has lost more than 90% of its value since the beginning of the year.

Asked by AFP, Cineworld did not respond immediately. The group manages more than 9,000 screens at 751 sites in 10 countries, notably under the Cineworld and Picturehouse brands in the United Kingdom and Ireland, and Regal Cinemas in the United States.

Massive losses in 2020 and 2021

“Despite a gradual recovery in demand since the reopening in April 2021, admission levels have recently been below expectations” due to a limited number of films on the screen, the company said in a press release on Wednesday. .

The situation should continue until next November, continued the group, which said it had “taken proactive measures” to strengthen its balance sheet and its flexibility.

Cineworld had cut its massive $2.7 billion loss in 2020 by five last year, at the height of the pandemic, when it had to close all of its theaters.

At the end of 2021, he had seen his activity recover in particular thanks to the success of “Spider-Man”, without returning to pre-Covid levels.

But the group’s heavy debt swelled to $8.9 billion and Cineworld was ordered by a Canadian court at the end of 2021 to pay hundreds of millions of pounds in damages for canceling a merger plan with its rival Cineplex, a decision he appealed.

“This is the final installment in what has been a Covid horror story for Cineworld, which has failed to attract enough moviegoers to its theaters to help pay off its huge debts,” Susannah commented. Streeter, of Hargreaves Lansdown.

“Even if it files for bankruptcy, this is unlikely to be the final chapter for the company.” But even revamped “Cineworld will continue to face difficult challenges as ticket sales are unlikely to fully recover to past levels,” she added.

JM with AFP

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