CINEMA chain Cineworld is preparing to file for bankruptcy after struggling to rebuild audiences post-pandemic, reports say.
The Wall Street Journal reports that the chain, which also operates Regal Cinemas in the United States, is in talks with lawyers from Kirkland & Ellis LLP and consultants from AlixPartners.
102 cinemas across the UK are now at risk of closure, leaving thousands of jobs potentially at risk, with more potential job losses worldwide. The chain currently has 28,000 employees across the globe.
Shares plummeted by two-thirds, from 20p to 2p within minutes of reports by the Wall Street Journal. Prior to the pandemic it was trading at £1.97.
The chain is apparently considering filing an insolvency proceeding in the UK, and is expected to file a chapter 11 petition in the United States, according to reports.
Cineworld, the world’s second-largest cinema chain, had warned recently that the lack of big budget movies was having a detrimental impact on admissions likely to continue onto November, putting it under financial strain as the firm struggled with 4.8 billion dollars (£4bn) of debt at the end of the last financial year.
It had pinned its hopes on releases such as Top Gun: Maverick, The Batman and Thor: Love And Thunder to aid falling ticket sales.
It told the London Stock Exchange on Wednesday: “Despite a gradual recovery of demand since reopening in April 2021, recent admission levels have been below expectations.
“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.”
Cineworld had in 2021 seen a 75% increase in audiences from last year, with 95 million people in attendance. However, this was still a far cry from the 275m cinemagoers prior to the Covid crisis.
However, Walid Koudmani, chief market analyst at financial brokerage XTB said that the lack of summer blockbusters were not to blame for the perilous situation faced by the business. He said: "In reality [Cineworld's] aggressive acquisition plan has taken on too much debt and this was always a huge risk as interest rates rise.
"Moreover, the move to stay at home entertainment and streaming providers has created a pivotal shift in the way consumers enjoy films and Cineworld simply has not adapted fast enough.
"It's all quite sad as the UK's high street will now likely lose a popular and familiar brand name."
In 2020, the chain saw a record loss of $3bn.
The business had previously said it was considering restructuring its balance sheet to protect its future.
Cineworld has declined to comment.
