Cineworld is in some serious trouble! After a tortuous two years thanks to Covid-19 and the failed court case against Canadian giant Cineplex, Cineworld has just entered Chapter 11 Bankruptcy in a Texan Court this afternoon. A key thing to note here is operations in the UK and beyond are unaffected, and it appears any site closure, sales or loss will if ever, occur within the US arm of Regal Cinemas.
Shareholders worldwide, however, can expect significant dilution as a result as the news will eventually hit the stocks. This will not be very good for the company and I’m pretty sure that shareholders are going to start panicking relatively soon.
Reduction of Debt for Cineworld
In a statement, the world’s second-biggest theatrical operator said the following:
We will Seek to implement a de-leveraging transaction that will significantly reduce the groups debt [and] strengthen its balance sheet.
The expectation is this will give the group legal breathing space until at least January 2023. Allowing the company to survive financially whilst allowing credit to come in to capitalise on the strong winter period ahead. Twitter was on fire this morning as news of conference calls from staff in the company, that were delayed or even cancelled both in the United Stastes and the United Kingdom.
This came just hours after another Tweet signified the coming of Chapter 11 within 24 hours from the Sunday Times Chief Business Correspondent, Sabah Meddings. She broke the news last night via Twitter (@Sabahmeddings) that the group would enter Chapter 11 as soon as the evening or today. Also, she released a bombshell that chief executive, Mooky Gredinger, would “be all but wiped out”.
Mooky Gredinger managed to keep his state in Cineworld
This comes after Small Screen highlighted the rumours last week that he was fighting to keep a stake in the new regime and looked likely to do so. You can read about how Cineworld’s CEO managed to retain his stake in the company despite the bankruptcy here. Meddings also confirmed that “no impact” was anticipated for the United Kingdom operation of Cineworld which will be a sigh of relief for many UK readers. And for now, there are no immediate plans to change anything with the United States operations. However, discussions with landlords in the US are ongoing from today, and we may see changes to sites as a result.
So, it does seem as though things aren’t too bad for Cineworld. However, it’s not really all that good either. The company is still going to be operational in the UK at least. Although, it does seem as though its time in the United States is pretty much over, which is sad news. We’re going to have to wait and see what happens to the cinema chain in the not-so-distant future.
What do you make of the news, is it a surprise? Are you shocked to hear all of this news about the dire straights that Cineworld has found itself in? We’d love to hear from you in the comments below
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