Cineworld, the second largest cinema operator, on the verge of bankruptcy

The British group Cineworld, the second largest cinema circuit in the world after the American AMC, is about to file for voluntary bankruptcy in the United States (under Chapter 11) and insolvency in the United Kingdom in the weeks to come. come, according to wall street journal Friday, August 19. To do this, the London-based film group hired lawyers from Kirkland & Ellis LLP and consultants from AlixPartners. This announcement caused the title to drop by 82% on the London Stock Exchange on Friday to 2.76 pounds (3.25 euros), its lowest price since the company’s first listing in 2007.

A too slow return of spectators to theaters after the months of closure following the Covid-19 pandemic has weakened this group, already seriously in debt, which mainly operates Regal Cinemas in the United States but manages a total of 9,518 screens in ten of countries (United Kingdom, Bulgaria, Czech Republic, Hungary, Ireland, Poland, Romania, Slovakia, Israel).

Too limited a number of supporting films

“Despite a gradual recovery in demand since reopening in April 2021, recent attendance levels have been below expectations,” Cineworld said in a statement Wednesday. Management explains this disappointing state of affairs due to too limited a number of buoyant films. “This situation is expected to continue until November” she warned. And aside from a few superhero movies like Black Panther: Wakanda Forever by Ryan Coogler, which is scheduled for release in the fall, the second half will suffer from the still limited production of Hollywood studios and from the fact that some prefer to skip theaters to broadcast their new releases directly on their streaming platforms.

The cinema operator faces multiple difficulties

By explaining having “took proactive measures” to strengthen its balance sheet, management says it is evaluating “several strategic options” to recapitalize and get out of debt. A major subject for this group which, according to the Wall Street Journal, must face future maturities on its more than 5 billion dollars (4.98 billion euros) of debt load. Invesco Ldt and State Street Corp are among Cineworld’s main creditors, according to Bloomberg. The cinema exhibitor faces mountains of difficulties. Already in deficit last year, it was sentenced at the end of 2021 to nearly a billion dollars in damages by a Canadian court for having canceled a merger project with its competitor Cineplex. He appealed.

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