U.K.’s largest cinema chain is filing for bankruptcy

Cineworld Group plc (LON: CINE) ended nearly 60% down on Friday following reports the British cinema chain was preparing to file for bankruptcy.

Cineworld shares crashed to under 2 pence

The Wall Street Journal quoted anonymous sources and said the Brentford-headquartered company that owns Regal Cinemas will file under “Chapter 11” in the United States and is considering “insolvency proceedings” in the United Kingdom as well.

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Cineworld is yet to make an official comment on reports of bankruptcy. At one point on Friday, shares of the London-listed firm that operates more than 9,000 screens across ten countries traded for as low as under 2 pence.

The entertainment conglomerate is working with lawyers from Kirkland & Ellis and restructuring consultants from AlixPartners through the bankruptcy proceedings.

At the end of 2021, Cineworld had $8.90 billion of net debt versus $1.80 billion in revenue only.

Box office remains dull even after the pandemic

Cineworld struggled with poor attendance for two years as the pandemic restricted movie fans to their homes.

Fewer blockbusters and added competition from “streamers” then weighed on hopes of a swift post-COVID recovery as well. In a recent statement, Cineworld confirmed:

Despite a gradual recovery of demand since re-opening in April 2021, recent admission levels have been below expectations.

Box office ticket sales are still down 30% versus 2019, which, as per the U.K.’s largest cinema chain, are unlikely to pick up significantly until late next year.

U.S. peers AMC and CNK were also down about 5.0% each on Friday.