Ian Woods reports on the mountain Cineworld needs to climb to put itself back on sure footing
Cinema chain Cineworld is reportedly preparing to file for bankruptcy within weeks following a slow recovery in movie attendances post-pandemic.
Shares within the company plummeted by two-thirds within minutes of reports, by the Wall Street Journal, that the world’s second biggest cinema business had hired lawyers from Kirkland & Ellis and consultants from AlixPartners to advise the bankruptcy process.
Cineworld, which also owns the Picturehouse chain in the UK and Regal Cinemas in the US, had pinned its hopes on releases such as Top Gun: Maverick, The Batman and Thor: Love And Thunder to aid its recovery from the heavy impact of the pandemic.
According to the paper the firm is expected to file a chapter 11 petition in the US and is considering insolvency proceedings in the UK.
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The development comes two days after Cineworld said it was assessing options to shore up its finances, after it blamed a “limited” film slate for weak audience numbers in recent months.
However, it told the London Stock Exchange on Wednesday: “Despite a gradual recovery of demand since reopening in April 2021, recent admission levels have been below expectations.
“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.”
The London-based business, which was saddled with $4.8 billion (£4 billion) of debt at the end of the last financial year, said it was considering restructuring its balance sheet to protect its future.
At the end of last year Cineworld reported an increase to its year-on-year debt by some $493 million (£417 million) to $4.8 billion (£4 billion) overall and reported a loss worth $708 million (£587 million).
However, its revenues more than doubled to $1.8 billion thanks to the latest James Bond and Spider-Man films.
During 2021 Cineworld saw around 95 million visitors pay to watch at its cinemas - an increase of 75% compared with 12 months previously - though that was still well below attendance levels witnessed before the pandemic.
Cineworld declined to comment when approached by PA.
ITV News has approached Cineworld for comment.