Cineworld’s 2017 buyout of US chain Regal Entertainment has come back to bite, after the London-listed cinema operator pledged another $170m to placate Regal Entertainment shareholders who weren’t happy with the price they received for its takeover.
The world’s second-largest cinema operator said that through a new agreement, $92m will be held in escrow and made available to Cineworld as extra liquidity in certain circumstances.
It’s a slightly softer blow than the $260m Cineworld could have been liable to pay Regal’s shareholders under the dispute.
It comes at a bad time for the FTSE 250 firm, which narrowly escaped financial collapse in November.
The entertainment giant has not been short of drama, either, having faced a £1m legal challenge with landlords over allegedly not paying rents at its Southampton site in the UK, as well as a recent shareholder revolt over executive pay.
Cineworld recently revealed embryonic plans to list its US-based movie chain Regal on Wall Street, in a bid to raise urgent funds after business was wiped out due to pandemic lockdown restrictions.
Chief executive Mooky Greidinger, however, said no plan was set in stone as of yet. “This is only one option out of many options on the capital markets for us,” Greidinger told the FT.
Cineworld was forced to close the majority of its 789 sites between January and April 2021, and swung to a $1.6bn loss in the first six months of last year, recovering slightly to a loss of $576.4m in the first half of this year.
But revenue fell by 59 per cent in the first half of this year to $292.8m, down from $712.4m in the same period last year.
In its latest results, the firm cautioned: “There can be no certainty around the recovery from Covid-19 in the short term.”