The slow roll of Cineworld’s anticipated bankruptcy filing continued this week, as the company’s stock price continued to dive and major shareholders divested their holdings either partially or completely. Despite this backdrop, the company is emphasizing that its cinemas remain “open for business as usual” and that there will be “no significant impact upon its [28,000] employees.”
For the time being, the epicenter of Cineworld’s turmoil is shareholders, who are expected to take a significant loss if the company files for bankruptcy. Polaris Capital Holding has now completely offloaded its shares of Cineworld Group, which had previously amounted to 3.5% of the total number of outstanding shares. Chinese investor Jangho Group is the second largest shareholder in the company, but it has recently reduced its holdings from 13.7% to 11.6% of outstanding shares. The trading price of Cineworld Group shares (CINE) has dropped more than 85% over the past two weeks.
Cineworld is currently saddled with $4.8B in debt. Much of this was taken on in the pursuit of a significant global expansion prior to the pandemic. The sudden and dramatic drop in revenues caused by the pandemic exacerbated this dilemma. Now that a quiet late summer/fall movie season is limiting revenues, it may be that the time to “make adjustments” has finally arrived.