Film theatre chain Cineworld warned on Wednesday that a lack of big-budget film releases was hitting admissions at its cinemas and would persist until November, hitting trading and the group’s liquidity.
“Despite a gradual recovery of demand since re-opening in April 2021, recent admission levels have been below expectations,” the company said in a statement, adding that it was still in talks with parties over potential funding, or restructuring of its balance sheet “through a comprehensive deleveraging transaction”
Any deleveraging transaction would likely result in very significant dilution of existing equity interests in the company, Cineworld said.
The company’s net debt jumped to $8.9bn at the end of 2021 from $600m a year earlier. It had pinned its hopes on a larger slate of blockbuster sequels such as James Cameron’s Avatar 2 and Tom Cruise’s Top Gun: Maverick.
However, the Covid pandemic has disrupted filming schedules, leading to lower output. Cineworld earlier this year said it was looking for new sources of cash to meet payment obligations to former shareholders of its US division Regal and a potential multi-million-dollar fine in a dispute with Canada’s Cineplex.
The company said it expects operations to remain unaffected despite the near-term hit, and that it expects to meet its business counterparty obligations.
Reporting by Frank Prenesti at Sharecast.com