The Way of the Cross continues for Cineworld and its shareholders. The British group, the world’s second largest cinema operator, announced on Monday the imminent placement in receivership in the United Kingdom of its parent company, Cineworld Group plc.
The procedure will not apply to the subsidiaries or to the operational companies of the rest of the group, which will continue to operate without interruption, specifies the press release from Cineworld. The announcement nevertheless caused the share price of the company, listed in London, to plunge by around 23% at the end of the day. Already very low, it is now worth barely more than half a penny…
The administrators, once appointed, will ensure the transfer of virtually all the ets of Cineworld Group plc into a new subsidiary, called Crown, of which the group’s creditors will become the sole owners. Shares in Cineworld Group plc will be suspended, then are expected to cease trading following the appointment of directors, expected in July. No compensation for current shareholders is foreseen.
No compensation for shareholders
Their titles were already worth almost nothing. This decision comes within the framework of a restructuring plan, which aims to get the company out of the bankruptcy procedure (“chapter 11”) by July, in which it is committed since last September in the United States.
“The proposed restructuring, when implemented, will transform the company’s balance sheet and provide significant additional cash to fund its long-term strategy,” the statement said. The text specifies that it will allow a debt reduction of 4.53 billion dollars, as well as the issue of subscription rights up to 800 million dollars and a new credit of 1.46 billion dollars. Conditions in line with the agreement that the group, which had tried in vain to sell itself, had found in April with its biggest creditors.
hard hit by the health crisis And the closing of the rooms, Cineword, which last year still operated more than 9,000 screens in 751 cinemas in 10 countries, is weighed down by a net debt of 8.8 billion dollars, according to the latest figures published for the first half of 2022. The group had acquired the American Regal Entertainment Group for 3.6 billion dollars at the end of 2017. The recovery in cinema attendance now appears to be a ray of hope, but it will benefit the creditors rather than the – future former – shareholders.