The owner of Regal Cinemas confirmed Monday that it was considering filing for bankruptcy but promised “business as usual” at it tries to shore up its finances.
British company Cineworld Group said in a statement that a “voluntary Chapter 11 filing in the United States” was one of the options it was reviewing in an attempt to reduce its debt burden.
Meanwhile, Cineworld and Regal theaters were open for “business as usual,” it added, and would remain so.
“Cineworld would expect to maintain its operations in the ordinary course until and following any filing and ultimately to continue its business over the longer term with no significant impact upon its employees,” the company said in the statement issued in response to reports last week.
Shares in Cineworld crashed as much as 80% in London on Friday after the Wall Street Journal reported that the world’s second largest movie theater chain had spoken to lawyers at Kirkland & Ellis LLP to advise on the bankruptcy process in the United States and United Kingdom.
The company’s stock fell another 20% Monday. The news also contributed to a plunge of more than 30% in the shares of AMC (AMC), the world’s largest movie theater chain.
Cineworld said earlier last week that, despite a “gradual recovery of demand” since last spring, admissions were below expectations.
The company blamed a limited roster of films for the lack of moviegoers, a situation it expects to continue until the end of November.
A Chapter 11 filing would give the company more time to restructure its debt and make a proposal to the bankruptcy court, while continuing to operate. Many large American companies have used Chapter 11 successfully to put their businesses on a firmer financial footing.
Cineworld, which owns more than 500 movie theaters across the United States as well as Picturehouse Cinemas in the United Kingdom, reiterated Monday that any “deleveraging transaction” would result in “very significant dilution of existing equity interests” for Cineworld shareholders.
“Cineworld’s evaluation of these strategic options remains ongoing. A further announcement will be made if and when appropriate,” it added.
The company struggled to stay afloat during the pandemic, when it was forced to close its movie theaters worldwide. It suffered a $2.7 billion loss in 2020, and $566 million loss in 2021.
It is a similar story for other movie theaters. Despite a big rebound, revenues at the US box office so far this year are nearly 30% lower than before the pandemic, according to Comscore, a media data company.
— Anna Cooban and Frank Pallotta contributed reporting.
