Cineworld shares plunge again on US bankruptcy fears: cinema chain struggles with huge Covid debt
Cineworld shares fell again last night as speculation mounted that the company was on the brink of bankruptcy.
The cinema chain was reportedly preparing to file for Chapter 11 bankruptcy in the United States today, and that its US arm will begin discussions with landlords about possible closures.
The UK business, which includes 127 cinemas, is not expected to be affected by the bankruptcy filing. But the group’s shares still plunged 34.1 per cent, or 2.02p, to 3.9p.
Curtain falls: Cinema chain Cineworld is reportedly preparing to file for Chapter 11 bankruptcy in the United States
A Chapter 11 bankruptcy filing would allow the company to remain in business while restructuring its debt. It will also protect the company from its lenders while bosses negotiate a bailout.
A collapse threatens to completely wipe out the interests of Cineworld CEO Mooky Greidinger and his brother Israel, vice chairman of the board, who together own just over 20 percent of the group through their family vehicle Global City.
The pair have led Cineworld to the brink of bankruptcy after entering the Covid-19 pandemic with huge debts and then being forced to close its cinema complexes for months.
And that’s despite the fact that the brothers have been paid nearly £26million in salary over the last eight years.
The company is crunching under a £7.5 billion debt burden, almost 140 times its market capitalization of just £53.6 million.
It has also racked up a £800million court bill over its botched deal to buy Canadian rival Cineplex.
Last week, the company was dealt another blow after Jangho Group, its largest independent shareholder, reduced its stake to 1.6 percent from 11.6 percent.
