Cineworld Shares Slump After Failing to Receive All-Cash Offers to Save Business | cineworld

Cineworld shares fell further after the theater chain said it had not received all-cash offers from potential suitors to save its global business, and any bankruptcy bailout deal would wipe out shareholders.

The London-listed group, which was forced to file for bankruptcy in the United States despite a broader recovery in cinema buoyed by hits such as the Avatar sequels and Top Gun, said it had received non-binding proposals from a “series of possible counterparty transactions”. for your business.

However, the world’s second-largest cinema operator admitted earlier this week that it had not received any offers for its business in the US and UK, its two biggest markets.

Cineworld shares were down 46% to 2.1p in early trading on Friday before recovering 21% to 3.2p. Cineworld was trading above 220p at the end of 2019, just before the coronavirus pandemic.

Avatar: The Way of Water helped draw people back to theaters in the wake of the Covid pandemic. Photography: 20th Century Studios/Disney/PA

While potential buyers have expressed “some strategic interest” in their overall business – Cineworld said it is focused on proposals for the entire group – proposals submitted were mainly for cinemas in Central Europe, Eastern Europe and Israel.

“The company is reviewing these proposals in conjunction with its consultants and key stakeholders,” the theater operator said on Friday. “Based on the proposals received to date, any sale transaction is not expected to provide any recovery for the company’s equity holders.”

Earlier this month, it emerged that London-based Vue International, Europe’s largest privately owned cinema chain, had secured the support of its backers to submit a bid.

Cineworld filed for US bankruptcy protection, known as Chapter 11, last September when it succumbed to nearly $6bn (£5bn) in debt it couldn’t fund due to pandemic restrictions that closed cinemas.

Under Chapter 11, a struggling company is temporarily protected from creditors, and Cineworld has updated the status of negotiations with its sponsors on an agreement to exit bankruptcy protection later this year.

“Discussions between the company and some of its stakeholders regarding a potential plan are progressing,” the company said. “While discussions suggest there is a route for the company emerging from Chapter 11 cases, in light of the existing level of debt that must be released under any plan, the company does not believe there will be sufficient creditor support. for a plan that contemplates any recovery of equity interests.”

Cineworld was co-founded and is run by Mooky Greidinger, who together with his family control 20% of the business. Other major investors include Chinese group Jangho, Polaris Capital Management, Aberdeen Standard Investments and Aviva Investors.

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In January, Cineworld denied trying to sell some of its theaters in the United States and Europe to AMC Entertainment, which owns rival chain Odeon.

“Is the end in sight for Cineworld as a listed company?” asked Russ Mould, chief investment officer at AJ Bell analysts. “We may see a split from the group, although Cineworld previously said it had no plans to sell individual assets.

“Cineworld paid the price for being too aggressive with its growth ambitions, saddled with significant debt when the pandemic hit, and the subsequent reopening of the movie industry being too weak to repair its finances.”

Cineworld has 128 cinemas across the UK under the Cineworld and Picturehouse brands, all operating as usual.

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