|
The
London-listed company operates about 9,500 screens globally,
with more than 7,000 in the United States, where it generates
three quarters of its revenue. The Cineplex deal announced three
months ago will make Cineworld the biggest cinema operator in
North America.
But Cineworld, the biggest shareholder of which sold part of its
stake on Monday to refinance debt, is also grappling with
worries over the impact of the coronavirus pandemic and investor
short-selling on concerns over the company's debt position.
Shares in the company plunged nearly 49% on Thursday to their
lowest in more than 10 years at 45.59 pence.
Cineworld said that in a worst-case scenario it might have to
close all cinemas for up to three months.
Though it said this would be unlikely, it added that the
potential indicates "the existence of a material uncertainty
which may cast significant doubt about the group's ability to
continue as a going concern".
Jefferies analysts previously estimated that the company was
burning about $115 million a month, had $470 million in readily
available cash and could deal with four months of all cinemas
being closed.
Cineworld's debt stands at $3.5 billion, excluding leases, with
additional financing of about $2.2 billion for Cineplex as it
begins to pay for the deal announced only a couple of years
after its $3.6 billion acquisition of Regal Cinemas.
"We have a legal contract with Cineplex; we are committed to the
deal," Cineworld finance chief Nisan Cohen told Reuters. "It's a
very attractive deal, very strong synergies and there is no
changing the plan".
If Cineworld were to abandon the deal, it could face a fee of up
to 28.3 million pounds ($36.1 million).
The company expects the deal to be completed in the first half
of 2020, but JP Morgan analysts expect it to be delayed.
Cineworld reiterated that the coronavirus outbreak has so far
had no material impact on its theater admissions, but that could
change with the delayed release of films such as the new James
Bond movie.
Cohen emphasized that delayed releases would merely push back
attendance by movie-goers until later in the year, with the
company saying it is excited about forthcoming films such as
"Black Widow", "Wonder Woman 1984" and "Top Gun Maverick".
(Reporting by Patrick Graham and Tanishaa Nadkar in Bengaluru;
Editing by David Goodman)
[© 2020 Thomson Reuters. All rights
reserved.] Copyright 2020 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|
|
