CNNWF - AMC plunges as rival Cineworld confirms potential bankruptcy filing
Bankruptcy fears already swept over the theater chain last week, but Cineworld ( OTCPK:CNNWF ) has just confirmed that it is preparing to file for Chapter 11. The developments have seen shares of the company plunge heavily following disappointing ticket sales and on news that dealing with a huge debt pile would likely have a big impact on existing stockholders. Things aren't looking better in the near future as lower ticket levels tied to a limited film slate are expected to continue until November.
Quote: "Cineworld is in discussions with many of its major stakeholders including its secured lenders and their legal and financial advisers," the company said in a statement. "As previously announced, any deleveraging transaction would, however, result in very significant dilution of existing equity interests in Cineworld."
In the meantime, the firm's global theaters are "open for business as usual and continue to welcome guests and members." While the operation includes Cineworld and Picturehouse theaters in the U.K., as well as a handful of brands in eastern Europe, more than two-thirds of its 751 locations are in the U.S. where it owns Regal Cinemas. The coronavirus pandemic and tough competition from streaming services has weighed on America's second-biggest theater chain, which had net debt of $8.9B at the end of 2021 vs. revenues of $1.8B.
No APEs here: Cineworld's position (a cash crunch and a film business that isn't quite back to 2019 levels) is not dissimilar to that of top U.S. chain AMC Entertainment ( NYSE: AMC ), whose stock is down 32% YTD and off another 34% in premarket trading on Monday ( but benefiting in its case from a "meme" trade ).
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AMC plunges as rival Cineworld confirms potential bankruptcy filing