Cineworld is set to enter administration and its shares will be suspended as its parent company enters administration as part of a restructuring plan to emerge from bankruptcy protection.
The cinema chain entered Chapter 11 proceedings in the US last year as it struggled to recover from the pandemic. It then announced a restructuring deal in April that would see shareholders get wiped out as creditors take full control of the business.
Cineworld, which has 751 cinemas across the globe including 129 in the UK, says this will cut its debts by $4.53 billion, allowing it to stay alive.
As ownership is transferred to the parent company controlled by creditors such as Blackstone, Invesco and Sixth Street Partners, the group will enter administration. However, its board said normal operations and jobs will not be affected, as the group will continue to welcome customers to see new releases such as The Flash.
Russ Mould, investment director at AJ Bell, said the decisions were unsurprising: “Neither event comes as a shock given this fits with previously announced financial restructuring plans and adheres to earlier warnings that shareholders would be left with nothing.”
The Cineworld is yet to appoint administrators, and said its shares will be suspended on the morning after they are selected.
Some investors have protested the plan, and hope to block it at a court hearing this week. They claim the valuation of Cineworld, which also owns the Picturehouse and Regal Cinemas brands, used in the plan is “inaccurate, biased and unreliable”.
Cineworld still expects to emerge from bankruptcy protection under its new ownership in July, but with high legal costs, it warned a delay in the restructuring plan could make it harder for the chain to stay afloat.
Shares in the group are down another 29%, or 0.2p, to 0.5p, with any remaining value depending on the slim chance the wipeout plan is blocked. Shares had been worth as much as 320p just over four years ago.
