Stricken company Cineworld has revealed plans to return to solvency, as the theatrical market continues to look somewhat uncertain.
Back in September 2022, Cineworld filed for Chapter 11 bankruptcy proceedings in the US, sparking fresh jolts of uncertainty about the viability of the multiplex model in the wake of a post-pandemic world.
The response to this news was mixed: some argued that this was an indicator that cinema chain operators would struggle to gain a foothold in a vastly different post-pandemic world, whereas others believed that this was a problem that was unique to the Cineworld group, a company that had acquired an unserviceable level of debt as part of its aggressive expansion.
Either way, since filing for Chapter 11, the cinema chain’s parent company Regal first found it impossible to restructure the company’s finances and instead looked to sell it. That proved fruitless too, so now the company has gone back to the drawing board and revealed a plan to exit bankruptcy. The plan will see The Regal Group unburden itself of about $4b worth of debt, mainly in three ways.
Firstly, those it owes money to will be asked to give up their claims in return for equity, giving them a stake in the business.
Secondly, over $2.2b of new funding will be raised.
Finally, the ‘restructuring will significantly dilute the holdings of existing shareholders,’ leaving them with almost nothing. The cinema operator said ‘that the plan does not provide for any recovery for holders of Cineworld’s existing equity interests.’
The news certainly isn’t good for Cineworld shareholders who were hoping the company might pull through and eventually provide a return on their investments. Reports of Regal’s plans come as CineMedia, the biggest cinema advertising business in North America, has also entered Chapter 11 bankruptcy proceedings.
Both stories will no doubt feed into the ongoing narrative regarding the woes faced by cinema operators worldwide. Still though, figures do show that in lots of ways, cinema attendance continues to be healthy although as we discussed here, quick streaming releases continue to be a problem. What are your thoughts on the matter? Will Cineworld make an eventual return into profitability? Let us know below.
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