Breaking news today in both the financial sectors & cinema industry as experts predict Cineworld is very close to running out of cash in just weeks.
Analysts state the company needs to raise a minimum of £380m to support it till Spring.
This is despite closing all U.K. & US sites within the company last week and effectively stopping all trade.
Along with making thousands redundant or moved onto unpaid leave till they re-open.
The second-largest chain in the world has hired experts to help facilitate reductions and deals with creditors as it continues to struggle in 2020.
Kiranjot Grewal, a research analyst at Bank of America, estimated that about $500m of new funds would be required to get through the first six months of 2021.
“[If] no RCF extension [is] granted. This would be closer to $700m if the group start paying full rents from 2021 onwards,” the analyst added.
Cineworld is hopeful they can renegotiate the terms on its bank overdraft (revolving cash facility) & access any additional support offered by the governments.
Cineworld is in a lot of trouble
Read more: Cineworld Loses £1 Billion Due To COVID-19
With the prospect of full rents at the start of 2021, they need cash fast to continue to survive.
CityAM reports that they also face challenges from commercial landlord AEW chasing an unpaid rent bill of £200k.
There’s one silver lining for Cineworld, if they can wade through the next few months & stay solvent there’s a trove of films due to release and profit to be made.
Elsewhere rivals AMC in America has warned investors they also face cash flow issues.
CNBC reports they too are about to run out of cash by 2021 and they face ‘little hope of recouping losses in the near future’
With New York’s cinemas firmly shut and only less than a third of California’s cinemas open for businesses it’s becoming increasingly problematic for America’s largest cinema chain.
What do you make of this news?
Are you worried about the current state of the cinema industry due to COVID-19?
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