LONDON (Parliament Politics Magazine) – After accruing about £4 billion in debt during the Covid crisis, Cineworld has acknowledged that it is considering filing for bankruptcy in the US. However, the company gave assurance to the employees and movie goers that its theatres would remain open and functioning even while it worked to restructure its debt.
The second-largest movie theatre chain in the world has had trouble recovering from the Covid-19 pandemic, which caused the majority of its locations to shut down and go into lockdowns. While the cinemas were closed, it declared a loss of $708 million (£598 million) and accrued $4.8 billion (£4 billion) in debt.
The financial repercussions of Cineworld’s abandoned buyout of the competing business Cineplex have also been a problem. The company will now have to pay the Canadian company $1 billion as a result of the withdrawal from the agreement.
It was revealed last week that Cineworld, which runs 751 locations across ten countries, had recruited restructuring experts AlixPartners and Kirkland & Ellis lawyers to help handle its mounting debt.
A number of “strategic options” were being considered by Cineworld, including chapter 11 bankruptcy in the US and similar legal actions in other countries, the company said on Monday. The business said that it was now discussing its alternatives with important stakeholders, including its lenders and their legal and financial consultants.
The struggling movie theatre chain, however, insisted that its Cineworld and Regal theatres were “open for business as usual and continue to welcome guests and members,” adding that the actions will not affect its 45,000 global personnel, including its 5,000 employees in the UK.
According to the company’s statement given on Monday, Cineworld would intend to retain its operations in the regular course until and after any filing and eventually to continue its business over the longer term with no substantial impact upon its workers.
A quite considerable dilution of shares for its investors could occur as a result of any effort to reduce its debt. The UK-listed shares of Cineworld increased 0.8% in morning trading.
