Over the past few months, we’ve kept an eye on the performance of both Cineworld and AMC with the latter owning Odeon in the UK.
Both Cineworld and AMC, were already struggling to keeping their heads above water with huge mountains of debt, and have since been hit catastrophically by the pandemic.
Cineworld PLC made many staff redundant, closed its American and UK operations, and made agreements with creditors to release cash flow under debt and equity restructuring agreements.
The Rise And Fall Of Cineworld
Since then, the company’s stock prices have recovered, albeit slowly, but on a positive trajectory as they look to re-open in May.
AMC likewise closed many cinemas, and despite in England cinemas reopening in the Summer, some Odeon sites have never reopened.
The company had a huge internal restructure of management which sadly, saw a lot of jobs go.
We recently reported that Odeon had been used as collateral for financial restructures made with creditors in January.
AMC Uses Odeon As Collateral To Ensure Survival
However, AMC has seen a huge surge in an uplift in the news of late, due to Reddit and the r/wallstreetbets movements in conjunction with its movement on Gamestop.
AMC has sort of become subject to a sort of spin-off movement, with huge shares being bought for potential wins due to attacking short sales and getting back at hedge funds.
However, it’s not out of the water yet.
Whilst it may have staved off potential bankruptcy for now, a year without income from films, advertising, concessions and its previous debt has had a detrimental effect.
Both companies have been subject to take over rumours and increased shareholder activity.
Most recently Cineworld from the Chinese Jangho Group.
Cineworld Takeover Rumours Continue To Surge
AMC has been rumoured as a potential purchase for companies such as Amazon, but without any real action to make other than a rumour.
Wanda Cedes Control
But what has gone under the radar however in recent weeks, has been the Wanda group ceding control of the company. And that has set analysts talking.
The company has been long expected to take back Cineworld into private ownership, and secured its own shareholding, as it stood with the controlling shareholder stake.
It purchased the company in 2012 for over $2.6 billion.
However, the prior 64.45% voting share and 37.7% ownership is no more and the stake and voting power has dropped to 9.8%.
AMC will now be managed by a widening list of shareholders as opposed to anyone majority holder.
In early February Wanda exercised its right and converted all outstanding common Class B stock to Class A, and only own less than 10% of the company.
This essentially diluted the value of its shares and power.
The company retains two seats on the board according to Bloomberg, so it will still have an influence.
Wanda has as a business suffered greatly over the past 12 months and now looking to cut back where possible after an initial spending spree including the likes of Legendary Entertainment.
It is certainly interesting times for AMC and by extension its UK subsidiary Odeon.
The company is certainly not out of the woods yet, but a potential boom in the Summer could give it the kick it needs to succeed.
The key for the company going forward is increase investor confidence, streamlining profitability to reduce debt leverage and keeping audiences coming back for more.
With over a year of delayed films and blockbusters at the ready, Cinema will surely thrive, once again.
What are your thoughts on the news?
Is this a good thing for Odeon?
Will you be returning to the Cinema?
Let us know in the comments below.
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