Cineworld “Evaluation of Strategic Options” as admissions fall below expectations, ahead with a slight slate

Cineworld, the second largest trade show in the world, today provided an update on its current trading position, liquidity and capital structure. The company, which also owns Regal in the US, said it is “in active discussions with various stakeholders and evaluating various strategic options for obtaining additional liquidity and potentially restructuring its balance sheet through a global deleveraging operation.”

If it were to de-leverage, any transaction would likely result in a significant dilution of its existing stake in Cineworld. However, the Group’s business operations are not expected to be affected and it expects to continue to fulfill its obligations to its current business counterparties; Even if the reception of guests in its cinemas is not hindered.

The Expo was one of the hardest hit in the industry as covid forced cinemas to close in a painfully unstable and protracted period for seniors, workers and the public alike. Cineworld is not alone in evaluating its own future. Vue International is restructuring and AMC is maneuvering to reduce the risk of survival.

Overall, the box office went well with a solid summer: Top Gun: Maverick – But we are currently in a phase of decommissioning as the effects of Covid continue to affect release dates; The bottleneck of VFX houses limiting expensive films doesn’t help.

Cineworld said: “Although there has been a gradual pick-up in demand since reopening in April 2021, recent admission levels have been below expectations. This low admission level is due to the limited film, which is expected to run until November 2022. and should adversely affect the group’s liquidity and commercial position in the short term.

Cineworld is therefore “taking proactive steps to ensure that it has the strength of the balance sheet and the flexibility to adapt to market conditions”. The group has already introduced operational and financial initiatives to manage costs and increase liquidity and believe these steps are necessary to “maximize business value as part of the film industry recovery”.

In March, Cineworld posted 2021 revenues of $ 1.805 billion. Operating profit also returned to $ 15.8 million from a loss of $ 2.258 billion in 2020. Overall, the group recorded a pre-tax loss of $ 708.3 million in the year hit by Covid, when cinemas they were closed for most of the first half. This was a substantial improvement over the 2020 loss of just over $ 3 billion.

In reporting these results, the group also said it continues to closely monitor its operating costs and cash flow and is “well positioned to take advantage of the expected recovery in the industry.”