Cineworld shares plummet more than 60% due to bankruptcy report

Cineworld, which operates 9,000 theaters in 10 countries, has warned that the lack of blockbusters is hurting viewership.

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LONDON – Shares of the British cinema chain Cineworld Group dropped sharply on Friday on news that the studio was preparing to file for bankruptcy after it failed to entice moviegoers back into cinemas after the pandemic subsided.

Shares fell about 63% in mid-afternoon London trading, up only slightly from the previous Friday, when it hit a record low of 1.8 pence per share.

It follows The report was first cited in The Wall Street Journal that the company that owns Regal Cinemas has hired a team of lawyers and consultants to advise on bankruptcy proceedings, according to people familiar with the matter.

The company is expected to file a chapter 11 lawsuit in the US and is considering filing for bankruptcy in the UK, they said.

Cineworld did not immediately respond to CNBC’s request for comment.

Fewer and fewer big-budget movies affect viewership

Cineworld, which operates 9,000 theaters in 10 countries, warned on Wednesday that there was a shortage of blockbusters has affected enrollment and will likely last until November, affecting the company’s liquidity.

This is the latest casualty for the movie theater industry, which has struggled to regain its footing following the coronavirus pandemic shutdowns, with viewers increasingly inclined to watch home-released movies. .

Ticket room ticket sales decreased by 30% compared to 2019. Meanwhile, less than 30% of movies have hit theaters due to filming disruptions during the pandemic and the tendency for some production companies to release directly to streaming platforms.

Shares of other U.S. theater companies AMC and CNK were both down about 5% in mid-morning trading, recovering slightly from earlier declines.

Cineworld said Wednesday that despite the success of box office hits like “Top Gun: Maverick” and a handful of Marvel movies, there aren’t enough big movies coming to theaters.

“Despite a gradual recovery in demand since reopening in April 2021, recent enrollment is still below expectations,” the company said.

Cineworld’s net debt stands at $8.9 billion at the end of 2021 compared to $1.8 billion in revenue.

The law firm Kirkland & Ellis LLP and consultants from AlixPartners are reportedly advising on bankruptcy proceedings, according to the WSJ.

Both were unavailable for comment when contacted by CNBC.

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