Cineworld, the world’s second largest cinema chain, has lamented that it failed to reach the meme stock status of rival AMC as it filed for bankruptcy protection in the US after giving way under its debts.
The UK-based owner of cinema chains, including Regal Cinemas, said in a filing on Wednesday that it was looking to reduce debt and shore up its balance sheet through a restructuring of its UK, US and US operations. States and Jersey which should virtually eliminate equity. holders.
The company said it had been financially devastated by the closure of its cinemas during the coronavirus pandemic as well as a shortage of new films to attract customers after it reopened.
In an accompanying statement, the company’s deputy chief executive, Israel Greidinger, wrote, “While Cineworld would, of course, have welcomed the liquidity of becoming a ‘meme stock’ like AMC, we have never been so lucky!”
AMC Entertainment, a Missouri-based movie chain, had also faced a bleak outlook, but capitalized on its action-meme status by selling billions of dollars worth of stock during the pandemic. Its stock price had soared thanks to frantic trading by retail investors active on Robinhood, the online stockbroker, who often discussed their favorite stocks on the Reddit message board.
AMC chief executive Adam Aron recently pitted the company’s good fortune against rivals who had been unable to raise enough funds to stay afloat.
The so-called Day One Statement tends to be a sober explanation of why a business struggled financially, but Greidinger used it to provide a colorful story of how his family got started with a single theater in Israel. in 1930 which would become part of the modern Cineworld. It included several photos of the company during its early years as well as a candid explanation of its possible downturn.
The company secured a nearly $2 billion debtor-in-possession financing facility from its lenders, which include U.S. investment managers Invesco, Eaton Vance and State Street.
Lenders are expected to take control during the bankruptcy process. Cineworld said it would make further restructuring plans “in due course”. Its London-listed shares will not be suspended.
A deal to reduce the group’s debt and lease liabilities, which stood at nearly $9 billion at the end of 2021, “would result in a very significant dilution of the group’s holdings,” Cineworld said, warning that ” there is no guarantee of recovery for holders of existing interests”.
The bankruptcy filing follows a years-long struggle with a pile of debt incurred by the expansion, including the 2017 acquisition of Regal. Chief executive Mooky Greidinger has twice agreed bailouts with lenders to avoid bankruptcy during the pandemic.
Shares of the London-listed group have lost more than 90% of their value over the past year as the group slumped, although they were up almost 10% on Monday to 4.3p.
Mooky Greidinger said: “The pandemic has been an incredibly difficult time for our business, with the forced closure of cinemas and a huge disruption to movie schedules that has gotten us to this point.”
“This latest process is part of our ongoing efforts to strengthen our financial position and targets deleveraging that will create a more resilient capital structure and an efficient business,” he added.
Cineworld plans to discuss improved lease terms for U.S. theaters with owners and said it is expected to exit Chapter 11 in the first quarter of 2023. Employees will continue to be paid, while its chains, which also include Cinema City, Picturehouse and Yes Planet, will be doing business as usual.
Cineworld quickly expanded into international markets under the Greidingers, but never managed to usurp US-based AMC as the world’s largest movie theater chain.
Cineworld, which operates 747 locations and employs around 28,000 people worldwide, is also facing a potential $1 billion payout to Canadian rival Cineplex following an attempted acquisition that was scrapped in 2020. Cineworld is appealing of the decision in Canadian courts.
It is not the only cinema group facing serious financial difficulties. Lenders to Vue International, the UK’s third-largest cinema chain, took control of the company as part of a £1billion debt restructuring in July. AMC has over $5 billion in debt.