Cineworld vows ‘business as usual’ as it confirms possible US bankruptcy filing

Cineworld has insisted that its operations will be unaffected by its planned restructuring as it confirmed it was drawing up plans to file for bankruptcy in the US.

The world’s second-largest cinema chain said on Monday that options to rescue the debt-laden business “include a possible voluntary Chapter 11 filing” in the US, along with similar proceedings in other countries where it operates.

“As previously announced, any deleveraging transaction would, however, result in very significant dilution of existing equity interests in Cineworld,” the company added.

The group, which also owns the US-based Regal Cinemas brand, said it would maintain operations over the longer term with “no significant” impact to its 28,000 employees worldwide.

“Cineworld and Regal theatres globally are open for business as usual and continue to welcome guests and members,” it said in a statement on Monday.

More than two-thirds of Cineworld’s 751 sites are in the US, where it owns Regal Cinemas. It also runs Cineworld and Picturehouse in the UK, along with several brands in eastern Europe.

Cineworld’s share price tumbled last week after the company said admissions were “below expectations” and it revealed plans to “potentially restructure its balance sheet through a comprehensive deleveraging transaction”.

Shares fell further on Friday after the Wall Street Journal reported that a Chapter 11 filing was under consideration. The law firm Kirkland & Ellis, along with restructuring consultancy AlixPartners and corporate advisory firm PJT Partners, are working on the restructuring.

The cinema industry was battered by the coronavirus pandemic and Cineworld has narrowly avoided bankruptcy twice in the past two years after struggling with mounting debts.

At the end of December, its net debt amounted to almost $4.9bn and lease liabilities were $4bn. Its current market capitalisation is £39mn.

It also faces a potential $1bn payout to Canadian rival Cineplex in compensation for a botched acquisition, which it pulled out of in June 2020. Cineworld is appealing against the decision in the Canadian courts.

Cineworld’s share price was flat in early morning trading in London at just above 4p. Before the pandemic, its shares were trading at more than £1.80.