Regal Owner Cineworld Evaluating “Strategic Options” as Admissions Fall “Below Expectations” Due to “Limited Film Slate”
Movie theater giant Cineworld Group, whose business includes the Regal cinemas, warned on Wednesday that “despite a gradual recovery of demand since re-opening in April 2021” following COVID-related theater closures, “recent admission levels have been below expectations.”
The second-largest exhibitor added: “These lower levels of admissions are due to a limited film slate that is anticipated to continue until November 2022 and are expected to negatively impact trading and the group’s liquidity position in the near term.”
More from The Hollywood Reporter
Paramount+, CBS, MTV to Air Taylor Hawkins London Tribute Concert
TIFF: Laura Poitras, Werner Herzog, Sacha Jenkins, Gabriela Cowperthwaite Films Join Doc Lineup
American French Film Festival Unveils Documentary Lineup (Exclusive)
That marked a change of tone from March, when the firm had shown a slide during a financial presentation that said: “Business now well positioned to benefit from the strong movie slate in 2022 and beyond.” The update also came despite such recent box office hits as Top Gun: Maverick.
Wednesday’s news from Cineworld also came with comments that the company was exploring various unspecified options to address its high debt load and liquidity needs, which have long been a focus for investors. Cineworld’s London-listed stock fell sharply, trending down 49 percent as of 1 p.m. London time.
The company on Wednesday didn’t provide latest details on its liquidity and other financials, but said that as a result of the admission trends, it has “been taking proactive steps to ensure it has the balance sheet strength and flexibility to adapt to market conditions.” This includes “significant previously disclosed operational and financial initiatives to manage costs and enhance liquidity,” which Cineworld said were “required to optimize its ability to maximize enterprise value as part of the recovery in the cinema industry.”
In connection with these initiatives, the exhibition giant said it also “remains in active discussions with various stakeholders and is evaluating various strategic options to both obtain additional liquidity and potentially restructure its balance sheet through a comprehensive deleveraging transaction.”
Cineworld didn’t detail possible options, but warned: “Any deleveraging transaction will likely result in very significant dilution of existing equity interests in Cineworld.” One observer said this comment could signal a possible deal with lenders. In July, for example, a group of lenders agreed to take over indebted British cinema chain Vue in a restructuring.
The group’s business operations are “expected to remain unaffected” though, the company said. “Cineworld continues to welcome guests to its cinemas across its global markets as normal, without disruption.”
Cineworld’s liquidity and debt burden, which stood at more than $5 billion in net debt as of the end of 2021, have long been in focus for investors. In July 2021, the company secured $200 million of incremental loans from a group of its existing lenders and agreed to covenant amendments on certain of its existing debt facilities, including reducing the minimum liquidity requirement and relaxing limitations on the use of cash.
Cineworld operates 751 venues in 10 countries, including Regal cinemas in the U.S., as well as Cineworld and Picturehouse theaters in the U.K. and various brands in Eastern Europe.
