Shares in Cineworld plunged further after the movie chain said it had received no cash offers from potential suitors to save its global business and any bankruptcy rescue deal would wipe out shareholders.
The London-listed group, which has been forced into bankruptcy in the US despite a wider movie recovery fueled by hits such as Avatar and Top Gun sequels, said it had received non-binding proposals from “a number of potential counterparties” for the business her.
However, the world’s second-largest film company admitted earlier this week that it had not received any offers for its operations in the US and the UK, its two biggest markets.
Cineworld shares were down 46% at 2.1am. in early trading on Friday, before recovering to fall 21% at 3.2 a.m. Cineworld was trading above 220p at the end of 2019, just before the coronavirus pandemic.
While potential buyers have expressed “some strategic interest” in its full operation – Cineworld said it is focusing on proposals for the entire complex – the offers submitted have mainly been for theaters in central Europe, eastern Europe and Israel.
“The company is reviewing such proposals in collaboration with its advisers and key stakeholders,” the cinema operator said on Friday. “Based on the proposals received to date, it is not expected that any sale transaction will provide recovery to holders of the company’s interests.”
Earlier this month it emerged that London-based Vue International, Europe’s largest private cinema chain, had secured backing from its financial backers to make a bid.
Cineworld filed for US bankruptcy, known as Chapter 11, last September when it fell to almost $6bn (£5bn) in debt that it was unable to finance as pandemic restrictions closed cinemas.
Under Chapter 11, a troubled company is temporarily protected from creditors, and Cineworld has updated on the status of talks with its backers about a deal to exit bankruptcy protection later this year.
“Discussions between the company and some of its shareholders regarding a potential plan are progressing,” the company said. “While discussions suggest there is a path to the company emerging from Chapter 11 proceedings, in light of the level of existing debt expected to be discharged under any plan, the company does not believe there will be sufficient support from creditors to a plan that anticipates any recovery for equities’.
Cineworld was founded and is run by Mooky Greidinger, who together with his family controls 20% of the business. Other major investors include China’s Jangho Group, Polaris Capital Management, Aberdeen Standard Investments and Aviva Investors.
In January, Cineworld denied it had tried to sell some of its cinemas in the US and Europe to AMC Entertainment, the owner of rival Odeon chain.
“Is the end in sight for Cineworld as a listed company?” asked Russ Mould, chief investment officer at analysts AJ Bell. “We could see a break-up of the group, even though Cineworld has previously said it had no plans to sell individual assets.
“Cineworld paid the price for its overly aggressive growth ambition, saddled with significant debt when the pandemic hit and the subsequent re-opening of the film industry was too weak to repair its finances.”
Cineworld has 128 cinemas in the UK, under the Cineworld and Picturehouse brands, which are operating as normal.