Cineworld Slumps 40% on Warning of Possible Dilution

By Geoffrey Smith 

Investing.com -- Cineworld (LON:CINE) shares plummeted 40% to an all-time low on Wednesday after the movie theater operator warned it may have to dilute shareholders with a massive balance sheet restructuring.

The company, which owns the Regal chain in the U.S. and the Picturehouse chain in the U.K., said it's "evaluating various strategic options to both obtain additional liquidity and potentially restructure its balance sheet through a comprehensive deleveraging transaction."

"Any deleveraging transaction will likely result in very significant dilution of existing equity interests in Cineworld," it added. 

The update is a response to weak trading in a year in which it has failed to get customers through the door even after the lifting of pandemic restrictions across most of the world.

"Despite a gradual recovery of demand since re-opening in April 2021, recent admission levels have been below expectations," Cineworld said. "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."

The company's balance sheet is already under serious strain due to its being ordered to pay $970 million in damages to Cineplex for abandoning an agreed takeover as the pandemic struck. Cineworld is appealing that decision.

By 03:20 ET (0720 GMT), Cineworld stock was down 40% at 12.44 pounds.