Cineworld shares slump on report bankruptcy filing is being prepared

People walk past a Cineworld in Leicester's Square, amid the coronavirus disease (COVID-19) outbreak in London, Britain, October 4, 2020. REUTERS/Henry Nicholls
  • Expects to file chapter 11 petition in the U.S. - WSJ
  • Considers filing insolvency proceeding in the UK - WSJ
  • Shares slide more than 80%

Aug 19 (Reuters) - Cineworld Group (CINE.L), the world's second largest cinema chain operator, is preparing to file for bankruptcy, the Wall Street Journal reported on Friday, just days after warning that a lack of blockbusters would hit its liquidity in the near term.

Cineworld declined to comment on the WSJ report.

Shares in the London-listed company slumped more than 81% to a record low of 1.8 pence after the WSJ said Cineworld is expected to file a Chapter 11 petition in the United States and is also considering insolvency proceedings in the UK.

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In 2020, when the world was combating the pandemic, Cineworld battled to survive a coronavirus collapse in film-making and cinema-going as the lockdown kept viewers away from stepping out.

The company, which operates under Cinema City, Picturehouse, Regal and Yes Planet brands, has seen a shortage of big-budget films which has reduced admissions and cut the chances of a bounce back from the pandemic-lows. read more

Cinema chain operators have seen a downfall as audiences have become addicted to streaming movies at home.

"We don't have anything to add beyond the statement we made on Wednesday," a spokesperson for the company said.

Net debt stood at $8.9 billion, including lease liabilities of $4.84 million, at the end of 2021, with cash and restricted cash of $354.3 million.

Cineworld is also facing payment obligations to former shareholders of its U.S. division Regal and a potential multimillion-dollar fine in a dispute with Canada's Cineplex (CGX.TO). read more

Refinitiv calculations assign Cineworld a combined credit score of 1, indicating it is highly likely to default in the next year.

Cineworld has engaged lawyers from Kirkland & Ellis LLP and consultants from AlixPartners to advise on the bankruptcy process, the WSJ said, citing unidentified people familiar with the matter.

AlixPartners declined to comment, while Kirkland & Ellis LLP did not immediately respond to a request for comment.

Cineworld said on Wednesday it was in talks over potential funding or a restructuring of its balance sheet, but noted the risk to shareholders of a "very significant dilution" of their interests.

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Reporting by Amna Karimi and Yadarisa Shabong in Bengaluru; Editing by Devika Syamnath, Kirsten Donovan and Mike Harrison

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