World’s second largest cinema chain after the American AMC, Cineworld announced Wednesday, September 7 to file for bankruptcy in the United States in order to restructure its liabilities and try to find new liquidity in the midst of a crisis in dark rooms. “Cineworld and certain of its subsidiaries have commenced bankruptcy protection proceedings in the Federal Bankruptcy Court for the Southern District of Texas“, according to a press release from the British company.
The group is counting on the support of its creditors to reduce its debt, solidify its accounts and accelerate its strategy, which aims in particular to modernize and improve its cinemas, he adds in this press release published on the London Stock Exchange. “The pandemic has been an incredibly difficult time for our business, with the forced closure of cinemas and a huge disruption to movie schedules that has gotten us to where we are.“, according to Cineworld chief executive Mooky Greidinger.
Cineworld is taking steps to position our company for the future. Our cinemas remain open around the world, and we continue to welcome guests to the “Best Place to Watch a Movie.” Learn more: https://t.co/LeKH5WJZ95 pic.twitter.com/X8c9se20IT
— Cineworld (@cineworld) September 7, 2022
The British group ensures that its activities will continue without interruption during its reorganization and specifies that it benefits from liquidities of 1.94 billion dollars from its creditors to achieve this. Cineworld hopes to release”during the first quarter of 2023of this procedure which concerns its entities in the United States, the United Kingdom and Jersey, while its subsidiaries elsewhere in the world are not concerned.
This restructuring will result, as the group had already announced, in a significant dilution of the value of its shares, information which had caused its price to collapse on the London Stock Exchange a few weeks ago. Its title was worth only 4.29 pence on September 7, up 10% on the trading session. It has collapsed by 87% since the start of the year.
For Eric Snyder, bankruptcy specialist at Wilk Auslander, creditors “don’t give much time” to the company to reorganize or make the decision to sell itself. Cineworld does not have the financial windfall of its American competitor AMC, which took advantage of the enthusiasm of stockbrokers to raise fresh money, notes the specialist .
The group, which manages more than 9,000 screens at 751 sites in 10 countries, notably under the Cineworld and Picturehouse brands in the United Kingdom and Ireland or even Regal Cinemas in the United States, deplored a slower recovery in demand at the end of August. than expected since the reopening of theaters post-containment, which Cineworld attributes to a lack of “blockbusters”, these films with big entries.
If the group took the full brunt of the pandemic, its excessive ambition with an accumulation of mountains of debt, in particular to pay for the purchase of the American chain Regal, contributed to its loss. Cineworld had bought Regal Entertainment in 2018 for some 5.8 billion dollars and had also tried the following year, despite its already heavy debt, to get their hands on the Canadian chain Cineplex. The merger then fell through and the group was heavily fined by an Ontario court ordering it to pay nearly 1.3 billion Canadian dollars in damages to Cineplex. Cineworld appealed.
Last year, Cineworld had divided by five its massive loss of 2.7 billion dollars recorded in 2020, at the height of the pandemic, benefiting in particular at the end of 2021 from the success of Spiderman, without however returning to pre-Covid levels. But the group’s debt had swelled again, to 8.9 billion dollars.
A movie like Top Gun: Maverick, which has already grossed some $1.4 billion at the box office this year, has renewed hope for a big-screen renaissance. But if other big machines like mission impossible 7 Where Avatar 2 are expected by the end of the year, observers believe that this will still not be enough.
“Taking the time to go to the cinema, for a film that lasts two or three hours, and spending 20 or 25 dollars there, is no longer an attractive activity for many people, especially the youngest.“, remarks Eric Snyder.