Cineworld shares went into freefall on Friday on a report that the world’s second largest cinema chain was preparing to file for bankruptcy amid plunging ticket sales after Covid pandemic restrictions were lifted.
The value of the London-listed movie house chain plunged by two thirds in late afternoon trade. Cineworld is labouring under a $4.8bn (£4bn) debt burden and has reportedly hired lawyers and consultants to advise on any bankruptcy.
It operates 751 sites in 10 countries including the Cineworld and Picturehouse chains in the UK, and 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 3.4p following the report. Before the pandemic it was trading at £1.97.
On Wednesday 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.
Reporting by Frank Prenesti at Sharecast.com
