Britain’s Cineworld, the world’s second-largest cinema chain, has filed for bankruptcy protection in the United States as it seeks to restructure after facing low audience numbers.
The group operates 751 cinemas, including more than 500 in the United States, more than 100 in Great Britain and Ireland, and others in Europe and Israel. It owns the Picturehouse chain in Britain and Regal Cinemas in the United States.
Cineworld said in a statement that it has filed for Chapter 11 protection, a court-supervised restructuring process that gives companies time to negotiate with creditors to reach a debt reduction settlement.
Cineworld said it “will seek to implement a deleveraging operation which will significantly reduce the group’s debt, strengthen its balance sheet and provide the financial strength and flexibility to accelerate and capitalize on Cineworld’s strategy in the film industry. movie theater”.
The statement said it hoped to emerge from bankruptcy proceedings in the first quarter of 2023 and had $1.94 billion in funding from existing lenders to help it through.
The company also warned existing shareholders that their stakes would likely be significantly diluted as part of the bankruptcy process.
Eric Snyder, bankruptcy expert at Wilk Auslander, said Cineworld’s creditors didn’t give him “a lot of time to make the decision between reorganizing it or selling it”.
“Going to a movie theater to watch a movie for two to three hours and spending $20 to $25 is no longer appealing to a lot of people, especially young people,” Snyder said.
Cineworld shares had fallen since the start of the year as its position deteriorated as people failed to return to cinemas in droves following the easing of Covid lockdowns.
Shares fell in September when she acknowledged she could file for bankruptcy.
Shares of Cineworld rose 10% on Wednesday to 4.29p, but were still down 87% year-to-date.
Analysts say Cineworld’s takeover of Regal in America in 2018 left it too indebted, putting it in a bad position to weather the pandemic.