Cineworld, the U.K.-based parent company of Regal Cinemas, saw its stock price drop by more than half in early trading on Wednesday after reporting lower-than-expected ticket sales that have exacerbated the chain’s debt woes.
Shares were trading at £9.50 on the London Stock Exchange, down from £20.80 at market close on Tuesday. That puts more pressure on the world’s second-largest cinema chain, which reported net debt $8.9 billion at the end of 2021 against revenues of $1.8 billion.
The company informed shareholders Wednesday that it will continue to seek additional financing and restructuring of its debt loads. However, that the company has not yet received any response. “any deleveraging transaction will likely result in very significant dilution of existing equity interests in Cineworld.”
Although the U.S. Box Office ($5.12B) is up 176% year-to date compared to 2021, ticket sales remain nearly 32% below record 2019 and 36% lower than 2018 during the same period. Even blockbusters like “Top Gun: Maverick” have not been enough to improve the exhibitors’ revenue picture.
“Despite a gradual recovery of demand since re-opening in April 2021, recent admission levels have been below expectations,”In an update, the exhibition company stated Wednesday. “These lower levels of admissions are due to a limited film slate that is anticipated to continue until November 2022 and are expected to negatively impact trading and the group’s liquidity position in the near term.”
Regal Cinemas was hard hit by the pandemic and has lost its cinemas. $3 billionIn 2020, the amount was nearly $710million before taxes. Although 2022 produced some box office successes, the number of wide releases remains below those in pre-pandemic years. Only 8% of box office hits have been made through May. 28 filmsdebuted in wide release, compared to 42 films in the same time period in 2019. Cineworld stated that it would investigate other options to remedy its financial woes, including concerns about liquidity and debt loads.
The company claimed that it was “taking proactive steps to ensure it has the balance sheet strength and flexibility to adapt to market conditions.”This includes “significant previously disclosed operational and financial initiatives to manage costs and enhance liquidity. The group believes these steps are required to optimize its ability to maximize enterprise value as part of the recovery in the cinema industry.”
Cineworld stated that it was in continuation of these efforts. “active discussions”With various stakeholders to assess “strategic options”To obtain additional liquidity and possibly “restructure its balance sheet through a comprehensive deleveraging transaction.”
Cineworld is not alone in feeling the financial impact of the pandemic. AMC Entertainment, the U.S.’s largest theater chain, has seen its share prices fall 17% since March 2022, when it was at its highest point.
