Cineworld considers bankruptcy as cinema battle continues

LONDON — Conditions in many movie theaters around the world are darkening.

Cineworld Group PLC, one of the largest theater operators in the industry, confirmed Monday that it is considering filing for Chapter 11 protection in the US as it faces billions of dollars in debt and more empty seats in front of its screens than expected.

The British company, which owns Regal Cinemas in the United States and operates in 10 countries, said its theaters remain “open for business as usual” as it considers options to ease its debt burden. Cineworld said it expects to continue operating even after any potential filings, although stock investors could face steep or total losses on their holdings.

Cineworld faces specific challenges after building $4.8 billion in net debt, excluding lease obligations. But the entire industry is navigating a weak recovery after the pandemic has closed theaters worldwide.

Just to be sure, moviegoers have been streaming back to the cinema this year to see blockbusters like “Spider-Man: No Way Home,” “Top Gun: Maverick” and “Jurassic Park: Dominion.” hit theaters and get off debuting movies on the HBO Max streaming service.

But this summer’s $3.3 billion ticket sales are still nearly 20% behind pre-pandemic summer 2019, according to data company Comscore, as of Sunday. And there don’t seem to be any major hits on the immediate horizon to make those numbers much better.

Cineworld said admission levels have been below expectations recently. And with a “limited movie supply,” it expects the lower levels to continue through November. That would create an additional bottleneck in finances.

Cineworld said it is in talks with lenders and other key stakeholders as it assesses its financial options. It also said it expects “eventually to continue its business in the longer term without significant impact on its employees.” It has about 28,000 employees, according to the company’s website.

Even if employees could make it intact, shareholders might not. The company again warned Monday that a transaction to relieve debt on its balance sheet could hurt its equity investors.

Shares of the London company fell 21.4% to the equivalent of about 3.8 cents. That followed a 58.3% drop on Friday after The Wall Street Journal reported that the company was preparing to file for bankruptcy protection within weeks.

Shares of other theater chains also fell Monday, but not nearly as much as Cineworld. Cinemark Holdings, for example, fell 5.8% to $15.33.

The executives said earlier in August that the next two months will be challenged by a dip in new releases. But they also said they are hopeful for a strong end to the year.

Rival AMC Entertainment also called the upcoming movie schedule relatively weak, though it is optimistic about the end of the year and around 2023.

This year, there is about a third less wide-release in theaters than before the pandemic. Some of that has to do with remaining delays in Hollywood’s production pipeline, caused by past shutdowns and delays from COVID-19. But it’s also because a lot of movies go straight to streaming.

One of the most-watched movies of the summer, Ryan Gosling-Chris Evans’ action thriller “The Gray Man,” played on Netflix.

Unless movies like Sony Pictures’ “Woman King” starring Viola Davis, or the bubbly Warner Bros. release “Don’t Worry Darling” starring Harry Styles and Florence Pugh, exceed expectations, the next two months in theaters won’t be certain. are… things before “Halloween Ends” and “Black Adam” arrive in late October. Further on the horizon, however, are a few sequels that could set box office records: “Black Panther: Wakanda Forever” (November 11) and “Avatar” (December 16).

Shares of AMC fell to $10.46 from $18.02 on Friday, although there were other factors affecting the stock. Monday was the first day of trading for the company’s new preferred stock, which bear the ticker symbol “APE.”

Investors received one share of APE for every AMC share they owned at the end of Friday. Analysts said it was similar to a two-for-one stock split, a deal where a company’s stock price often falls by about half. Analysts said the new APE stock offers AMC a way to raise money in the future that it could use to reduce its debt.

The company tapped the stock market last year to raise money and benefited from a huge surge in stock price when it was overtaken by the frenzy surrounding so-called meme stocks.

Shares rose sixfold in January 2021, then more than doubled in May and again in June. Profits were driven by hordes of amateur investors, with some calling themselves “monkeys” willing to hold the stock, regardless of whether Wall Street professionally called it a bad buy.

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AP film writer Jake Coyle contributed.