Cineworld, which operates 9,000 theaters in 10 countries, has warned that a lack of blockbusters is hurting filming.
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LONDON – Shares of British cinema chain Cineworld Group plunged Friday after reports that it is preparing for bankruptcy after failing to lure viewers back to the cinema after a pandemic lull.
The stock fell about 63% in mid-afternoon trading in London, up slightly from earlier Friday when it hit a record low of 1.8p per share.
It follows reports first quoted in The Wall Street Journal that the company, which owns Regal Cinemas, had engaged a team of lawyers and advisers to advise on the bankruptcy process, according to people familiar with the case.
The company is expected to file a Chapter 11 petition in the US and is considering pursuing insolvency proceedings in the UK, they said.
Cineworld did not immediately respond to CNBC’s request for comment.
Fewer movies with a big budget hurts turnout
Cineworld, which operates 9,000 theaters in 10 countries, warned Wednesday that a lack of blockbusters was hurting admissions and would likely last through November, impacting the company’s liquidity.
It is the latest victim of the cinema industry, which has struggled to regain a foothold after the coronavirus pandemic lockdowns, with viewers increasingly inclined to stream film releases at home.
Ticket sales at the box office are down 30% compared to 2019. Meanwhile, 30% fewer films have been released in theaters due to film failures during the pandemic and the tendency of some production companies to release directly on streaming platforms.
Shares of other US theater companies AMC and CNK both fell about 5% in mid-morning trading, rebounding slightly from an earlier dip.
Cineworld said on Wednesday that despite the success of hits like “Top Gun: Maverick” and some Marvel movies, not enough big movies hit theaters.
“Despite a gradual recovery in demand since the reopening in April 2021, recent admission levels have been below expectations,” the company said.
Cineworld’s net debt was $8.9 billion at the end of 2021, compared to revenue of $1.8 billion.
Law firm Kirkland & Ellis LLP and advisors to AlixPartners would advise on the bankruptcy proceedings, according to the WSJ.
Neither could be reached for comment when CNBC reached out to them.
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