Movie theatre chain Cineworld has filed for bankruptcy in the US as the debt-laden business seeks time to restructure, bosses revealed on Wednesday.
The British-based firm is the second-largest cinema chain in the world, with more than 9,518 screens across over 700 sites in 10 countries.
But the company said it had filed for Chapter 11 – which can allow a company to stay in business and restructure its debt.
The Chapter 11 involves Cineworld's US, UK and Jersey businesses.
Cineworld
Mike Egerton
The British-based firm is the second-largest cinema chain in the world
Mike Egerton
It plans to emerge from bankruptcy in the first quarter of next year and said it is “confident that a comprehensive financial restructuring is in the best interests of the group and its stakeholders, taken as a whole, in the long term.”
Current shareholders in the business are likely to see their existing positions diluted significantly, Cineworld said.
But its shares are expected to continue trading on the London Stock Exchange.
The business said it would use the restructuring to talk to its landlords in the US and negotiate for better lease terms.
While the cinema industry has been struggling to recover from the pandemic, which has led to fewer blockbusters, lower theatre attendance and increased popularity of streaming, Cineworld's specific issue is the amount of debt it has amassed over the years.
The company took on debt to fund part of its £2.26bn purchase of Regal in 2017, and more to survive the pandemic.
Its net debt including lease liabilities stood at around £7.7bn at the end of 2021.
Excluding lease liabilities, its net debt around £4.2bn at that time.