Theater Chain Stock Plummets Over 30% After Revealing Shareholders Will Lose All Equity Amid Bankruptcy Cineworld, which owns popular chain Regal Cinemas, filed for Chapter 11 bankruptcy protection in the US in September 2022.
By Emily Rella
It's been a rough few years for the movie theater business thanks to the pandemic, with related restrictions that saw many theaters without customers for months at a time.
And although moviegoers have been able to return to the cinema, the companies themselves are having a much harder time bouncing back.
One such company is UK-based Cineworld, which owns the well-known chain, Regal Cinemas, which declared Chapter 11 Bankruptcy protection in its U.S. markets in September 2022.
Now, the company announced that it expects shareholders to have their equity completely wiped out as they have been unable to find a buyer to take over the chain.
"In light of the level of existing debt that is expected to be released under any (reorganization) plan, the Company does not believe that there will be sufficient creditor support for a Plan that contemplates any recovery for equity interests," Cineworld said in a statement.
The company noted that they did not receive any all-cash bids.
The theater chain plans to operate "business as usual" in all of its global markets as the restructuring continues, including continuing to honor all terms of existing membership programs such as Regal Unlimited and Regal Crown Club in the U.S.
"It is not expected that any sale transaction will provide any recovery for the holders of the Company's equity interests," the statement said. "Any sale transaction for the Group as a whole would not include the sale of the equity interests in Cineworld itself and would therefore not be subject to the rules of the Takeover Code."
Cineworld oversees theater chains Regal Cinemas, Cinema City, Picture House, and Yes Planet. The chain has locations across multiple countries with its strongest markets being the U.K. and the U.S.
"The pandemic was an incredibly difficult time for our business, with the enforced closure of cinemas and huge disruption to film schedules that has led us to this point," said Mooky Greidinger, CEO of Cineworld, in a past statement about the company's Chapter 11 filing. "This will allow us to continue to execute our strategy to reimagine the most immersive cinema experiences for our guests through the latest and most cutting-edge screen formats and enhancements to our flagship theatres."
According to Reuters, Cineworld was seeing a net debt of $8.81 billion by the end of last June "including lease liabilities."
Friday's news for shareholders sent Cineworld's stock plummeting.
The company was down over 31% in a 24-hour period as of Friday afternoon, and down over 93% in a one-year period at the same time.
