Cinema chain Cineworld’s market value more than halved after management said that it was in talks with stakeholders about a financial rescue package.
The chain has blamed a lack of blockbuster films which has in turn resulted in lacklustre admission levels.
Cineworld has managed to rack up a debt of more than $4.8bn (£4bn/€4.8bn) according to the Guardian, after the impact of the pandemic and the fact that not enough films were hitting the cinemas.
In a stock exchange statement, Cineworld said that it was in discussion with various stakeholders. “Any deleveraging transaction will likely result in very significant dilution of existing equity interests in Cineworld,” the chain said.
Cineworld’s market value dropped to just over £100m yesterday (Wednesday), an almighty drop from the £4.4bn valuation before the COVID-19 pandemic hit.
The Guardian reports that a debt-for-equity swap deal is likely to see the stake held by investors and Cineworld’s chief executive Mooky Greidinger, and his family, wiped out.
Cineworld stated: “Despite a gradual recovery of demand since reopening in April 2021, recent admission levels have been below expectations. These lower levels are due to a limited film slate that is anticipated to continue until November 2022 and are expected to negatively impact trading and the group’s liquidity position in the near term.”
Rival cinema chain Vue is also struggling following the pandemic, with lenders taking control of Vue International as part of a £1bn debt restructuring deal which also saw its owners’ stake wiped out.
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