Cineworld to exit Chapter 11 in H1, sees no recovery for shareholders

(Sharecast News) - Cineworld said on Friday that it has received non-binding proposals for some or all of its businesses but that none of these involve an all-cash bid for the entire business and any sale will not provide recovery for shareholders.

The company said it was reviewing the proposals with its advisers and key stakeholders but does not expect any transaction to provide recovery for shareholders.

Cineworld filed for Chapter 11 bankruptcy in the US last September. The filing involved businesses in the US, UK and Jersey and Cineworld said the restructuring process was expected to significantly reduce debt and strengthen its balance sheet and liquidity position.

The company said on Friday that it continues to operate its global business and cinemas as usual without interruption and expects to emerge from Chapter 11 cases in the first half of this year.

Although a sale transaction could delay this process, Cineworld said it remains "committed to emerging from the Chapter 11 cases as expeditiously as possible".

At 1310 GMT, the shares were down 35% at 2.55p.

Russ Mould, investment director at AJ Bell, said: "Is the end in sight for Cineworld as a listed business? The company has received various expressions of interest for parts of its estate, suggesting we could see a break-up of the group even though Cineworld has previously said it had no plans to sell individual assets.

"Cineworld has paid the price for being too aggressive with its growth ambitions, weighed down by significant debt when the pandemic struck and the subsequent reopening of the cinema industry being too weak to repair its finances. It has watched too many gambling films and played the wrong hand.

"Selling subsidiaries doesn't mean it will be suddenly swimming in cash. Any interested party in Cineworld's assets knows that the cinema group is desperate and so they are likely to pitch any offers at a low level.

"From where we stand today, two things look almost certain - one, that we won't see a bidder for the whole business; and two, that shareholders will be left with nothing. Even if the company does sell some of its subsidiaries, the end game still appears to be a debt-for-equity swap whereby creditors take control of the business."