Cineworld: London-listed cinema company preparing to file for bankruptcy - why and what is the share price?

Cineworld, which is the second biggest cinema chain in the world, is currently in the process of filing for bankruptcy.

The London-listed company employs tens of thousands of people worldwide across 751 sites and 10 countries, including 102 in the UK and over a dozen in London.

Following recent financial reports, Cineworld have racked up over £4 billion in debts, putting the future of the company at risk.

This has led to officials beginning the process of filing for bankruptcy with its share price collapsing to a record-low.

But what is the reason behind Cineworld’s debt? Why have they filed for bankruptcy and where does the share price stand currently? LondonWorld has you covered with all the latest information.

What has happened and why is Cineworld filing for bankruptcy?

Cineworld had initially reported astronomical losses as a result of the forced closures of cinemas during the Covid-19 pandemic, but have since struggled to recover.

In 2021, the cinema chain admitted around 95 million cinema-goers which was well below the 275 million they were experiencing before the pandemic.

It is believed that officials blame the lack of blockbuster film releases for the lack of footfall.

This led to the group reporting a $708 million loss last year.

This is despite showing revenues doubling from $852 million to $1.8 billion around the time of the releases of James Bond: No Time To Die and Spider Man: Far From Home.

Cineworld is also facing a near-$1 billion payout as a result of pulling out of a deal to acquire Canadian rival Cineplex.

As a result of what experts have described as “an aggressive acquisition plan”, as well as struggling to get enough people through the door, Cineworld is now reporting a $493 million year on year increase in net debt.

At the end of 2021, the company’s net debt stood at $4.8 billion / £4 billion.

Despite stakeholders initially beginning talks regarding a financial rescue package on Wednesday, 17 August, plans are now underway to file for bankruptcy.

Cineworld have hired lawyers from Kirkland & Ellis and consultants from AlixPartners to advise on the process.

What is the Cineworld share price currently?

The market value of Cineworld almost halved on Wednesday, however matters got worse on Friday as the share price slumped by more than 81-percent.

It is currently valued at a staggeringly low 1.8 pence per share.

Before the COVID-19 pandemic, Cineworld were trading at £1.97, as well as holding a market value of £4.4 billion, which is a drop off of 88% as the company is now priced at £50 million.