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.

Register now for FREE unlimited access to Reuters.com

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.

Register now for FREE unlimited access to Reuters.com
Reporting by Amna Karimi and Yadarisa Shabong in Bengaluru; Editing by Devika Syamnath, Kirsten Donovan and Mike Harrison

Our Standards: The Thomson Reuters Trust Principles.