(Reuters) -Britain's Cineworld Group is preparing to file for bankruptcy as it struggles to rebuild attendance from pandemic lows, the Wall Street Journal reported on Friday, citing people familiar with the matter.
(Reuters) -Cineworld Group, the world’s second largest cinema chain operator, is preparing to file for bankruptcy, the Wall Street Journal reported on Friday, just days after warning that a lack of blockbusters would hit its liquidity in the near term.
Cineworld declined to comment on the WSJ report.
Shares in the London-listed company slumped more than 81% to a record low of 1.8 pence after the WSJ said Cineworld is expected to file a chapter 11 petition in the United States and is also considering insolvency proceedings in the United Kingdom.
The Regal Cinemas owner, which operates in 10 countries including the U.S. and UK, on Wednesday warned that a lack of big-budget movies was hitting admissions and would likely persist until November, potentially complicating efforts to cut debt.
“We don’t have anything to add beyond the statement we made on Wednesday,” a spokesperson for the company said.
Net debt stood at $8.9 billion, including lease liabilities of $4.84 million, at the end of 2021, with cash and restricted cash of $354.3 million.
Cineworld is also facing payment obligations to former shareholders of its U.S. division Regal and a potential multimillion-dollar fine in a dispute with Canada’s Cineplex.
Refinitiv calculations assign Cineworld a combined credit score of 1, indicating it is highly likely to default in the next year.
Cineworld has engaged lawyers from Kirkland & Ellis LLP and consultants from AlixPartners to advise on the bankruptcy process, the WSJ said, citing people familiar with the matter.
AlixPartners declined to comment while Kirkland & Ellis LLP did not immediately respond to a request for comment.
Cineworld said on Wednesday it was in talks over potential funding or a restructuring of its balance sheet, but noted the risk to shareholders of a “very significant dilution” of their interests.
(Reporting by Amna Karimi and Yadarisa Shabong in Bengaluru; Editing by Devika Syamnath, Kirsten Donovan)
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