The troubled London-listed company provides an update on its auction process but maintains that it does not expect existing shareholders to see a stock price recovery.
Crisis-hit Cineworld claims to have received “a number” of proposals for some or all of its business. But none of them entail an all-cash offer for the entire organization.
The second-largest cinema chain in the world, which filed for US bankruptcy protection in September to restructure its debt and strengthen its balance sheet, stated that it remained in discussions with several current stakeholders regarding a potential reorganization.
It was added that neither option would likely result in a recovery for shareholders.
Cineworld now anticipates emerging from Chapter 11 bankruptcy protection in the first half of this year.
“Although discussions indicate that there is a path for the company to emerge from the Chapter 11 cases, the company does not believe that there will be sufficient creditor support for a plan that contemplates the recovery of equity interests in light of the level of existing debt that is expected to be released under any plan,” it said in a statement.
Since pandemic lockdowns halted theatres, the chain and the industry have struggled to recover audience numbers.
Cineworld, however, was also the architect of its own goal.
While aggressive expansion before the public health emergency — including a $3.6bn deal to acquire Regal in 2017 — resulted in it becoming the second-largest chain in the world, the buying spree and the COVID revenue blow harmed its finances.
Shares fell more than 40% to just above 2 pence in response to the company’s most recent update. Already battered by the prospect of extinction.
Cineworld was known to favor a complete asset sale in such a scenario.
The identities of other potential bidders are unknown, although Cineworld denied claims made by the proprietor of rival Odeon in January that they had held discussions regarding the sale of cinemas.
Walid Koudmani, the chief market analyst at online investment platform XTB.com, commented on the decline in Cineworld’s share price. “While it has set a deadline of April 10 for final bids. Given its $6bn debt, it is unclear if it can properly pay shareholders.”
In addition, this only adds to the negative sentiment surrounding the company. As its share price has dropped more than 90 percent since last year.
