Movie theater giant Cineworld, whose business includes the Regal cinemas, warned on Wednesday that “despite a gradual recovery of demand since re-opening in April 2021” following COVID-related theater closures “recent admission levels have been below expectations.”
It added: “These lower levels of admissions are due to a limited film slate that is anticipated to continue until November 2022 and are expected to negatively impact trading and the group’s liquidity position in the near term.”
The debt-laden company said that as a result of this, it has “been taking proactive steps to ensure it has the balance sheet strength and flexibility to adapt to market conditions.” This includes “significant previously disclosed operational and financial initiatives to manage costs and enhance liquidity,” which Cineworld said were “required to optimize its ability to maximize enterprise value as part of the recovery in the cinema industry.”
In connection with these initiatives, the exhibition giant said it also “remains in active discussions with various stakeholders and is evaluating various strategic options to both obtain additional liquidity and potentially restructure its balance sheet through a comprehensive deleveraging transaction.” In this context, it also warned: “Any deleveraging transaction will likely result in very significant dilution of existing equity interests in Cineworld.”
The group’s business operations are “expected to remain unaffected” though, the company said. “Cineworld continues to welcome guests to its cinemas across its global markets as normal, without disruption.”
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