Cineworld laments its failure to become a meme stock in unusual bankruptcy filing

Cineworld, the world’s second-largest movie theater chain, lamented the fact that it never reached rival AMC’s major stock position when it filed for bankruptcy protection in the US after buckling in debt debt.

The UK-based owner of chains including Regal Cinemas said in a filing on Wednesday that it is looking to cut debt and strengthen its balance sheet through restructuring. Business structures in the UK, USA and Jersey are set up for all but the equity holders. .

The company said it has been devastated financially by the closure of cinemas during the pandemic as well as a scarcity of new movies to attract customers after reopening.

In an accompanying statement, the company’s deputy chief executive, Israel Greidinger wrote: “Of course, while Cineworld welcomes the liquidity of being a ‘meme stock’ like AMC, we have never so lucky now!”

AMC, a Kansas-based movie theater chain, has also faced a bleak outlook but has capitalized on its status as a meme stock by selling billions of dollars in new stock during the period. epidemic. Its stock price has skyrocketed thanks to frenzied trading by active retail investors on Robinhood, the online stockbroker who often discusses their favorite stocks on Reddit message boards. .

AMC CEO Adam Aron recently compared the company’s luck to that of rivals that couldn’t raise enough cash to stay afloat.

The so-called day one statement tends to be a sobering explanation of the reasoning behind a company’s financial difficulties, but Greidinger used it to provide a colorful history of how His family started with a single theater in Israel in 1930, which would become part of the modern Cineworld. It includes several photos of the business in its early years along with a candid explanation of how it went wrong in the end.

The company has secured a debtor financing facility of nearly $2 billion from its lenders, including US investment managers Invesco, Eaton Vance and State Street.

Lenders are expected to take control during the bankruptcy process. Cineworld said it would lay out further restructuring plans “on time”. Its London-listed shares will not be suspended.

An agreement to reduce the group debt and lease debtUp to nearly $9 billion by the end of 2021, Cineworld said, would “lead to a very substantial dilution of equity interests in the group,” Cineworld said, warning that “there is no guarantee guarantee any recovery to existing equity interest holders”.

The bankruptcy filing comes after a years-long struggle with a pile of debt that arose through an expansion that included the acquisition of Regal in 2017. CEO Mooky Greidinger has twice agreed to the settlements. rescue package with lenders to avoid bankruptcy during the pandemic.

The group’s London-listed shares have shed more than 90% of their value over the past year as the group has struggled, though they were up nearly 10% on Monday to 4.3 points.

Mooky Greidinger said: “The pandemic has been an extremely difficult time for our business, with forced cinema closures and huge disruptions to showtimes that have led us to times this point”.

“This latest process is part of our ongoing efforts to strengthen our financial position and pursue de-leverage that will result in a more flexible capital structure and business performance. effective,” he added.

Cineworld plans to discuss improving U.S. movie theater rental terms with landlords, and said it is expected to emerge from Chapter 11 in the first quarter of 2023. Staff will continues to be paid, while its chains, including Cinema City, Picturehouse and Yes Planet, will conduct business as usual.

Cineworld rapidly expanded internationally under the Greidingers but never succeeded in usurping US-based AMC as the world’s largest cinema chain.

Cineworld, which operates 747 websites and employs about 28,000 people globally, also faces a potential $1 billion payout to Canadian rival Cineplex after an acquisition attempt was abandoned in December. 2020. Cineworld is appealing the Canadian court’s decision.

This is not the only film group facing serious financial difficulties. Lenders Vue International, the UK’s third-largest cinema chain, took control of the company in a £1billion debt restructuring in July. Meanwhile, AMC has more than 5 billion USD in debt.

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