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Cineworld the latest meme stock since bankruptcy filing

Cineworld, the world’s second-largest cinema chain, complained that it failed to achieve the meme status of rival AMC when it filed for bankruptcy protection in the US after paying off its debts.

Owners of UK-based theater chains, including Regal Cinemas, said in a filing on Wednesday that they were trying to reduce debt and shore up balance sheets by restructuring their UK, US and Jersey businesses, which almost all equity owners would do. extinguish .

The company said it had been financially devastated by the closure of cinemas during the coronavirus pandemic, as well as the lack of new films to entice customers after reopening.

In an accompanying statement, the company’s Deputy CEO Israel Greidinger wrote, “While Cineworld would certainly welcome liquidity to become a ‘stock meme’ like AMC, we have never been happier!”

AMC Entertainment, a Missouri-based cinema chain, also faces a bleak outlook but is capitalizing on the meme’s status by selling billions of dollars worth of stock during the pandemic. Stock prices have skyrocketed thanks to frantic trading from retail investors active at Robinhood, an online stockbroker, who frequently discuss their favorite stocks on Reddit message boards.

AMC CEO Adam Aaron recently compared the company’s fortunes to those of its competitors who have not been able to raise enough cash to stay afloat.

The so-called first day statement is usually a plausible explanation of the reasons for the company’s financial troubles, but Greidinger uses it to tell the colorful story of how his family founded a theater in Israel in the 1930s that would become a part of modern times. Cineworld should be. It included several photos of the company in its early years, as well as an honest explanation of its subsequent demise.

The company has secured nearly $2 billion in debt financing facilities from its lenders, which include US investment managers Invesco, Eaton Vance and State Street. Creditors are expected to take control during the bankruptcy proceedings. Cineworld said it would outline further restructuring plans “in due course”. Shares listed in London will not be suspended.

The agreement to reduce the group’s debt and lease obligations, which amount to nearly $9 billion by the end of 2021, would “resul in a very significant dilution of its holdings in the group,” Cineworld said, warning that “there is no guarantee that it will.” provide any reimbursement to existing holders of ownership”.

The bankruptcy filing follows years of struggling with a mountain of debt caused by expansion, including the 2017 acquisition of Regal. CEO Mooky Greidinger has twice negotiated bailouts with creditors to avoid bankruptcy during the pandemic.

The group’s London-listed shares have lost more than 90% of their value over the past year since the group’s collapse, although they rose nearly 10% to 4.3 points on Monday.

Mooky Greidinger said: “The pandemic has been a very difficult time for our business, with forced cinema closures and major disruptions to film schedules bringing us here.”

“This new process is part of our ongoing efforts to strengthen our financial position and aim for deleveraging which will create a more sustainable capital structure and a more efficient business,” he added.

Cineworld plans to talk to landlords about better rental terms for US theaters and says it will emerge from Chapter 11 in the first quarter of 2023. Employees will continue to receive wages, while its network, which also includes Cinema City, Picturehouse, and Yes Planet, will continue as usual.

Cineworld quickly expanded into international markets under Greidingers, but was never able to seize US-based AMC as the world’s largest cinema chain.

Cineworld, which operates 747 locations and employs about 28,000 people worldwide, also faces a potential $1 billion payment to Canadian rival Cineplex for an overturned takeover bid in 2020. Cineworld is appealing the decision in a Canadian court.

This is not the only cinema group facing serious financial difficulties. Creditor Vue International, the UK’s third-largest cinema chain, took over the company in a £1 billion debt restructuring in July. AMC has more than $5 billion in debt.

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