Cineworld shares plummet more than 60% on bankruptcy reports
Cineworld, which operates 9,000 theatres in 10 countries, has warned that a lack of blockbusters is hurting admissions.
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LONDON — Shares of British cinema chain Cineworld Group plunged Friday on reports that it is preparing to file for bankruptcy after failing to entice viewers back to movie theatres following a pandemic lull.
The stock was down around 63% in mid-afternoon trade in London, up just slightly from earlier Friday, when it hit a record low of 1.8 pence per share.
It follows reports first cited in The Wall Street Journal that the company, which owns Regal Cinemas, had engaged a team of lawyers and consultants to advise on the bankruptcy process, according to people familiar with the matter.
The company is expected to file a chapter 11 petition in the U.S. and is considering filing an insolvency proceeding in the U.K., they said.
Cineworld did not immediately respond to CNBC’s request for comment.
Fewer big-budget movies hurt attendance
Cineworld, which operates 9,000 theaters in 10 countries, warned Wednesday that a lack of blockbusters was hurting admissions and would likely persist until November, impacting the company’s liquidity.
It is the latest casualty of the movie theater industry, which has struggled to regain its footing following coronavirus pandemic lockdowns, with viewers increasingly inclined to stream movie releases at home.
Box office ticket sales are down 30% compared to 2019. Meantime, there have been 30% fewer movies released in theaters owing to filming disruptions during the pandemic and a tendency for some production companies to release directly to streaming platforms.
Shares of other U.S. theater companies AMC and CNK were both down around 5% in mid-morning trade, recovering slightly from an earlier dip.
Cineworld said Wednesday that despite the success of hits such as “Top Gun: Maverick” and some Marvel movies, not enough big films were hitting cinemas.
“Despite a gradual recovery of demand since re-opening in April 2021, recent admission levels have been below expectations,” the company said.
Cineworld’s net debt stood at $8.9 billion at the end of 2021 compared to revenues of $1.8 billion.
Law firm Kirkland & Ellis LLP and consultants from AlixPartners are said to be advising on the bankruptcy proceedings, according to the WSJ.
Neither were available for comment when contacted by CNBC.