CNWGY - Cineworld sheds half its value on news of debt measures

UK-based cinema owner Cineworld nosedived in U.S. trading - ( OTCPK:CNWGY ) -48.2% , ( OTCPK:CNNWF ) -49% - and fell 57.6% in London Wednesday after reporting disappointing ticket sales and the news that dealing with a huge debt pile will likely have a big impact on existing stockholders.

The company - the owner of Regal, America's second-biggest theater chain - had net debt of $8.9B at the end of 2021, vs. revenues of $1.8B.

And "despite a gradual recovery of demand since re-opening in April 2021, recent admission levels have been below expectations ," the company told investors. Those lower levels are tied to a limited film slate that's expected to continue until November .

That means "proactive steps" to ensure balance sheet strength and flexibility, Cineworld said.

It's evaluating "various strategic options to both obtain additional liquidity and potentially restructure its balance sheet through a comprehensive deleveraging transaction" - and any deleveraging will likely result in "very significant dilution of existing equity interests in Cineworld."

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 ( AMC ), whose stock is down 35.8% over the past year (but benefiting in its case from a "meme" trade ).

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