Cineworld preparing to file for bankruptcy after pandemic rout

theguardian.com:

Cineworld, the world’s second largest cinema chain, is preparing to file for bankruptcy after failing to see a quick enough recovery in movie-going since the end of the pandemic.

The London-listed business, which has run up debt of more than $4.8bn (£4bn) after losses soared while cinemas were shut during the global coronavirus crisis, has hired lawyers from Kirkland & Ellis and consultants from restructuring experts AlixPartners to advise on the process.

The company, which operates 751 sites in 10 countries including the Cineworld and Picturehouse chains in the UK, is expected to file a chapter 11 petition in the US and is considering insolvency proceedings in the UK, according to the Wall Street Journal.

Cineworld’s already battered share price crumpled from 20p to 2p following the report. Before the pandemic it was trading at £1.97.

The move follows Cineworld’s market value more than halving on Wednesday after the company said it had started talks with stakeholders about a financial rescue package, blaming a lack of blockbuster films for lower-than-expected admissions.

The group said it was in “active discussions with various stakeholders” and evaluating strategic options to obtain additional liquidity and potentially restructure its balance sheet to reduce debt. “Any deleveraging transaction will likely result in very significant dilution of existing equity interests in Cineworld,” it warned.

Investors reacting to the news sent the company’s market value plunging to less than £50m on Friday, having been valued at as much as £4.4bn before the pandemic all but destroyed the live cinema industry.

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