London-listed company, which operates 751 sites in 10 countries, has run up debts of more than £4bn. 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 after 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.
Main image credit: Henry Nicholls/Reuters