(Alliance News) - Cineworld Group PLC shares crashed on Wednesday after it warned lacklustre trading is prompting potential financing decisions that could significantly dilute shareholders.
Shares in the Picturehouse chain operator plunged 41% to 12.30 pence each in London on Wednesday morning, falling 61% in 2022 so far. Its shares used to trade above 180p before crashing upon the outbreak of Covid in spring of 2020.
Cineworld said recent admission levels have been below expectations, despite a slow recovery of demand since re-opening in April 2021.
The lower admission levels stem from a "limited film slate", according to the company, which it expects to persist until November. The low demand will be likely to hit trading and its liquidity position in the meantime, it said.
"Consequently, the group has been taking proactive steps to ensure it has the balance sheet strength and flexibility to adapt to market conditions. This includes significant previously disclosed operational and financial initiatives to manage costs and enhance liquidity," it continued.
Cineworld is in "active discussions" with various stakeholders, exploring the possibilities to secure further liquidity or restructure its balance sheet through a "comprehensive deleveraging transaction".
Such a transaction would cause a "very significant dilution" of existing shareholders in the company, Cineworld warned.
At the end of December, its net debt stood at a startling USD4.84 billion, with cash and restricted cash of USD354.3 million.
Cineworld said it will update the market "if and when appropriate". Its interim results are due on September 22.
By Elizabeth Winter; elizabethwinter@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
