Cineworld To Remain Open While Pursuing Chapter 11 And A “Fully Funded De-Leveraging”

The world’s second largest cinema chain, Cineworld, is continuing to weigh its options for bankruptcy and restructuring, including filing Chapter 11.

The company is “n discussions with many of its major stakeholders, including its secured lenders and their legal and financial advisers”, according to an update from Bloomberg Monday morning.

The Bloomberg report also noted that the company is seeking near-term liquidity and a path to support a “fully funded deleveraging transaction”. In other words, things probably don’t look too great for the equity…

The company says it will likely maintain operations throughout the course of the transaction with little to no impact on its employees. 

Recall, we wrote just hours ago that the company was preparing for bankruptcy. 

Cineworld operates 9,000 theaters in 10 countries, CNBC reported on Friday. It blamed its financial woes not only on the pandemic, but on a “lack of blockbusters” hurting admissions now that people are allowed back in theaters.

“Despite a gradual recovery of demand since re-opening in April 2021, recent admission levels have been below expectations,” the company said. 

Box office sales are down 30% compared to pre-pandemic, the report notes. At the same time, there has been a double whammy for movie theaters, as 30% less films are being released directly to theaters, as streaming platforms have risen in popularity. 

It had $8.9 billion in net debt at the end of 2021, compared to revenue of $1.8 billion. The company brought on two popular bankruptcy advisors, Kirkland & Ellis LLP and consultants from AlixPartners, to help advise on proceedings. 

The announcement dragged down U.S. based theaters AMC and CNK in trade on Friday.  That pain has appeared to continue this morning, with AMC briefly plunging near single digits after trading close to $25 just days ago…