Cineworld’s Share Price Tanks 23% As It Rubbishes AMC Talk

Cineworld’s share price slumped before recoving ground on Tuesday as it quashed reports of talks with rival AMC Entertainment to sell some of its theatres.

At 3.6p per share the leisure stock was trading 1.2% lower in New Year trading. It had fallen more than 23% earlier in the session.

Cineworld announced that “neither it nor its advisers have participated in discussions with AMC Entertainment Holdings, Inc. regarding the sale of any of its cinema assets.”

It added that neither the ad hoc group of lenders under its 2018 credit facility nor its advisers were in discussions with the US cinema chain.

No Break-Up

Today’s statement follows a regulatory filing by AMC on 21 December in which it said it was in talks with some of Cineworld’s lenders over possible acquisitions.

Then AMC — the world’s largest cinema group — said that it had entered “discussions focused on the acquisition of certain strategic theatre assets of Cineworld in the United States and Europe.”

Outlining its plans today, Cineworld said that it “has not initiated and does not intend to initiate a separate marketing process for the sale of any of its assets on an individual basis.”

Marketing Process

Cineworld said on Tuesday that it would run a marketing process “in pursuit of a value maximising transaction for the group’s assets” and begin contacting possible buyers later this month. This will be undertaken alongside a capital restructuring plan, it said.

Cineworld is the second-largest cinema chain on the planet following its takeover of Regal in the US almost five years ago. It currently has around 750 sites dotted across 10 countries, the lion’s share of which are in North America.

The $3.6bn takeover of Regal loaded the company with debt which it was unable to pay back following Covid-19 lockdowns. It entered Chapter 11 bankruptcy protection last September to help it come to terms with creditors.

Cineworld had $8.8bn worth of net debt on its books as of June.

“Very Significant Dilution”

Trading has improved for cinema chains following the end of coronavirus restrictions. However, a weak slate of film releases has resulted in disappointing box office sales.

In late September Cineworld advised that third-quarter takings were lower than forecast and predicted that takings would remain below pre-pandemic levels in 2023 and 2024, too.

Today Cineworld affirmed its belief that “any restructuring or sale transaction agreed with stakeholders will result in a very significant dilution of existing equity interests in Cineworld.”

It added that “there is no guarantee of any recovery for holders of Cineworld’s existing equity interests.”