Cineworld considers bankruptcy as cinema struggles continue

Aug 21, 2022, 4:06 PM | Updated: Aug 24, 2022, 4:38 am
FILE - A man walks past a Cineworld cinema in Leicester Square, London, on Oct. 5, 2020. Cineworld ...

FILE - A man walks past a Cineworld cinema in Leicester Square, London, on Oct. 5, 2020. Cineworld Group PLC, the world's second-largest chain of movie theaters, said Monday Aug. 22, 2022 that it is considering filing for Chapter 11 bankruptcy protection in the U.S. and similar actions elsewhere. (AP Photo/Alastair Grant, File)

(AP Photo/Alastair Grant, File)

LONDON (AP) — Conditions are dimming at many movie theaters around the world.

Cineworld Group PLC, one of the industry’s biggest theater operators, confirmed Monday that it’s considering filing for Chapter 11 bankruptcy protection in the U.S., as it contends with billions of dollars in debt and more empty seats in front of its screens than expected.

The British company, which owns Regal Cinemas in the United States and operates in 10 countries, said its theaters remain “open for business as usual” as it considers options for relief from its debt load. Cineworld said it expects to continue operating even after any potential filing, though its stock investors could face steep or total losses on their holdings.

Cineworld faces challenges specific to itself after building up $4.8 billion in net debt, not including lease liabilities. But the entire industry is navigating a tenuous recovery after the pandemic shut theaters worldwide.

To be sure, moviegoers have streamed back into theaters this year to see blockbusters like “Spider-Man: No Way Home,” “Top Gun: Maverick,” and “Jurassic World: Dominion.” Industry giant Warner Discovery has said it’s doubling down on theaters and moving away from debuting films on its HBO Max streaming service.

But this summer’s $3.3 billion in ticket sales is still running nearly 20% behind the summer of 2019, before the pandemic, as of Sunday, according to data firm Comscore. And there don’t seem to be any big hits on the immediate horizon to make those numbers much better.

Cineworld said its admissions levels have recently been below expectations. And with a “limited film slate,” it expects the lower levels to continue until November. That would mean an additional crunch to its finances.

Cineworld said it’s holding talks with lenders and other major stakeholders as it reviews its financial options. It also said it expects “ultimately to continue its business over the longer term with no significant impact upon its employees.” It has about 28,000 workers, according to the company’s website.

Even if employees could make it through intact, shareholders may not. The company warned again Monday that a transaction to ease the debt on its balance sheet could hurt its stock investors.

The company’s stock in London tumbled 21.4% to the equivalent of roughly 3.8 U.S. cents. That followed a 58.3% plunge on Friday after The Wall Street Journal reported the company was preparing to file for bankruptcy protection within weeks.

Shares of other theater chains also stumbled Monday, but nowhere near as much as Cineworld. Cinemark Holdings fell 5.8% to $15.33, for example.

Its executives said earlier in August that the next two months will be challenged by a dip in new releases. But they also said they’re hopeful for a strong close of the year.

Rival AMC Entertainment has also called the upcoming film schedule relatively weak, though it’s optimistic about the end of the year and about 2023.

This year, about a third less wide-release films have been put into theaters as before the pandemic. Some of that has to do with residual delays in Hollywood’s production pipeline caused by earlier COVID-19 shutdowns and postponements. But it’s also because a lot of movies go straight to streaming.

One of the summer’s most-watched movies, the Ryan Gosling-Chris Evans action thriller “The Gray Man,” played on Netflix.

Unless films like Sony Pictures’ “Woman King,” with Viola Davis, or the buzzy Warner Bros. release “Don’t Worry Darling,” with Harry Styles and Florence Pugh, overperform expectations, the next month or two in theaters lack sure-things before “Halloween Ends” and “Black Adam” arrive in late October. Farther on the horizon, though, are a few sequels that could set box-office records: “Black Panther: Wakanda Forever” (Nov. 11) and “Avatar: The Way of Water” (Dec. 16).

AMC’s stock fell to $10.46 from $18.02 on Friday, though it had other factors impacting the shares. Monday marked the first day of trading for the company’s new preferred equity units, which have the ticker symbol “APE.”

Investors received one share of APE for every AMC share they owned at the end of Friday. Analysts said it was similar to a two-for-one stock split, a deal that often sees a company’s share price drop by roughly half. Analysts said the new APE shares offer AMC a way to raise cash in the future, which it could use to reduce its debt.

The company last year tapped the stock market to raise cash, taking advantage of a huge run-up in its share price when it got caught up the frenzy surrounding so-called meme stocks.

Its shares rose sixfold in January 2021 and then more than doubled that May and again in June. The gains were driven by hordes of amateur investors, with some referring to themselves as “apes” willing to hold the stock regardless of whether professional Wall Street called it a bad buy.


AP Film Writer Jake Coyle contributed.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


File - People shop at an Apple store in the Westfield Garden State Plaza mall in Paramus, New Jerse...
Associated Press

A key inflation gauge tracked by the Fed slowed in February

The Federal Reserve's favored inflation gauge slowed sharply last month, an encouraging sign in the Fed's yearlong effort to cool price pressures through steadily higher interest rates.
2 days ago
FILE - The OpenAI logo is seen on a mobile phone in front of a computer screen displaying output fr...
Associated Press

Musk, scientists call for halt to AI race sparked by ChatGPT

Are tech companies moving too fast in rolling out powerful artificial intelligence technology that could one day outsmart humans?
3 days ago
Associated Press

Starbucks leader grilled by Senate over anti-union actions

Longtime Starbucks CEO Howard Schultz faced sharp questioning Wednesday before the Senate Health, Education, Labor and Pensions Committee
4 days ago
FILE - The overdose-reversal drug Narcan is displayed during training for employees of the Public H...
Associated Press

FDA approves over-the-counter Narcan; here’s what it means

The U.S. Food and Drug Administration on Wednesday approved selling naloxone without a prescription, the first over-the-counter opioid treatment.
4 days ago
FILE - A Seattle police officer walks past tents used by people experiencing homelessness, March 11...
Associated Press

Seattle, feds seek to end most oversight of city’s police

  SEATTLE (AP) — The U.S. Justice Department and Seattle officials asked a judge Tuesday to end most federal oversight of the city’s police department, saying its sustained, decade-long reform efforts are a model for other cities whose law enforcement agencies face federal civil rights investigations. Seattle has overhauled virtually all aspects of its police […]
5 days ago
capital gains tax budgets...
Associated Press

Washington moves to end child sex abuse lawsuit time limits

People who were sexually abused as children in Washington state may soon be able to bring lawsuits against the state, schools or other institutions for failing to stop the abuse, no matter when it happened.
5 days ago

Sponsored Articles

Compassion International...

Brock Huard and Friends Rally Around The Fight for First Campaign

Professional athletes are teaming up to prevent infant mortality and empower women at risk in communities facing severe poverty.
Emergency Preparedness...

Prepare for the next disaster at the Emergency Preparedness Conference

Being prepared before the next emergency arrives is key to preserving businesses and organizations of many kinds.
SHIBA volunteer...

Volunteer to help people understand their Medicare options!

If you’re retired or getting ready to retire and looking for new ways to stay active, becoming a SHIBA volunteer could be for you!
safety from crime...

As crime increases, our safety measures must too

It's easy to be accused of fearmongering regarding crime, but Seattle residents might have good reason to be concerned for their safety.
Comcast Ready for Business Fund...
Ilona Lohrey | President and CEO, GSBA

GSBA is closing the disparity gap with Ready for Business Fund

GSBA, Comcast, and other partners are working to address disparities in access to financial resources with the Ready for Business fund.

Medicare open enrollment is here and SHIBA can help!

The SHIBA program – part of the Office of the Insurance Commissioner – is ready to help with your Medicare open enrollment decisions.
Cineworld considers bankruptcy as cinema struggles continue