Cineworld has said it is looking to gain liquidity and potentially restructure its balance sheet through a “comprehensive deleveraging transaction” as it carried billions in debt.
The company, which owns US-based cinema chain Regal, said it had voluntarily sought a Chapter 11 bankruptcy filing in the US in pursuit of a potential restructuring.
“Cineworld and Regal theatres globally are open for business as usual and continue to welcome guests and members,” Cineworld said in a statement today, responding to media speculation over the weekend.
Shares plunged nearly 25 per cent to 3.07p per share by 2pm BST on Monday. The company has lost more than 85 per cent of its share price over the past five days.
“Any deleveraging transaction would, however, result in very significant dilution of existing equity interests in Cineworld… Cineworld’s evaluation of these strategic options remains ongoing.”
The cinema chain, one of the biggest in the world, said there would be “no significant impact” on its employees, following concerns over job losses.
London-listed Cineworld had been hit particularly hard by successive Covid-19 lockdowns. The company has lost some 94 per cent of its share price value over the past 12-months as it sought a pandemic turnaround.
The company had been lumbered with £4bn worth of debt at the end of the last financial year.
Tim Symes, partner at London-based insolvency and asset recovery law firm Stewarts, said: “Cineworld’s cash flow crisis, created by too few blockbuster films to show, brings into sharp focus the precariousness of a business model necessarily reliant on the output of others to keep it in business.”