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 looking at in an effort to reduce its debt burden.
Meanwhile, Cineworld and Regal theaters were open for “business as usual,” it added, and would remain so.
“Cineworld expects to continue operating as normal until and after an eventual filing and ultimately to continue operating in the longer term without significant impact on its employees,” the company said in a statement released last week in response. on reports.
Shares in Cineworld plunged as much as 80% in London on Friday after the Wall Street Journal reported that the world’s second-largest cinema chain had spoken with lawyers from Kirkland & Ellis LLP to advise on the bankruptcy process in the United States and the United Kingdom. .
The company’s stock fell another 20% on Monday. The news also contributed to a more than 30% plunge in shares of AMC (AMC)the world’s largest cinema chain.
Cineworld said earlier last week that despite a “gradual recovery in demand” since last spring, take-up was below expectations.
The company blamed a limited number of films for the lack of moviegoers, a situation that is expected to last until the end of November.
A Chapter 11 filing would give the company more time to restructure its debts and make a proposal to bankruptcy court while going ahead. Many large US companies have successfully used Chapter 11 to put their businesses on a firmer financial footing.
Cineworld, which owns more than 500 movie theaters in the United States and Picturehouse Cinemas in the United Kingdom, reiterated Monday that any “deleveraging transaction” would result in “a very significant dilution of existing equity interests” for Cineworld shareholders.
“Cineworld’s evaluation of these strategic options continues. A further announcement will be made as and when appropriate,” it added.
The company struggled to survive during the pandemic, when it had to close its cinemas worldwide. It suffered a loss of $2.7 billion in 2020 and a loss of $566 million in 2021.
It’s a similar story for other movie theaters. Despite a major uptick, revenue at the U.S. box office so far this year is nearly 30% lower than before the pandemic, according to Comscore, a media data company.
— Anna Cooban and Frank Pallotta contributed to reporting.