The exhibitor says the dire downside scenario that assumes the loss of two to three months’ worth of revenue across its entire business could also cast “significant doubt” about its ability to stay in business.
Exhibition giant and Regal owner Cineworld Group on Thursday reported higher 2019 earnings and revenue and provided an update on the coronavirus, saying its business impact has so far been “minimal.” But it also said it has drawn up potential downside scenarios in case the spread of the virus does lead to cinema closures, with a particularly dire one posing a risk that it could breach its debt covenants.
If it then doesn’t manage to negotiate new terms with lenders, this could “cast significant doubt about the group’s ability to continue as a going concern,” a phrase meaning it could go out of business.
The stock was down more than 34 percent as of 9:45 a.m. London time.
The U.K.-based cinema group said revenue for 2019 hit $4.37 billion, up 6 percent compared with $4.10 billion in 2018 when the company owned Regal for only 10 months, or down 6 percent from $4.66 billion when using comparable figures, saying that was “softer as expected compared to 2018, predominantly due to the strong comparative film slate.” Admissions of 275.0 million fell from 308.4 million on a comparable basis assuming Cineworld had owned Regal for all of 2018. Adjusted earnings before interest, taxes, depreciation and amortization came in at $1.03 billion, down nearly 4 percent on a comparable basis…