Cineworld Gets New Lending, Eyeing Perilous Path Post-Covid

Thomas Seal
·2 min read

(Bloomberg) -- Cineworld Group Plc said new lending and a U.S. tax refund will carry it to the end of the year even if its theaters remain closed, but spelled out plausible risks that cast “significant doubt” over its survival.

London-based Cineworld announced a new $213 million convertible bond due 2025 alongside its full-year results. Paired with a U.S. tax refund, that provides liquidity through to the end of the year, and it added it has debt covenant waivers until June 2022. It will also seek shareholder approval to temporarily suspend its borrowing limit.

Shares fell as much as 10.7% in early London trading. The stock has recovered in recent months with vaccination prospects after more than two thirds of its value was wiped off at the outbreak of the pandemic last March.

The world’s second-largest cinema chain hemorrhaged money after a year in which its theaters were often closed or empty due to the coronavirus pandemic. It swung to an operating loss of $2.3 billion for the 12 months to Dec. 31 and wrote down its assets’ book value by $1.34 billion. It assumes admissions will return to 90% of 2019 levels by the end of 2021, but won’t recover to pre-Covid levels even through 2023.

Watch: Mooky Greidinger of Cineworld Group Plc on Bloomberg TV

It also acknowledged the “existence of material uncertainties that may cast significant doubt upon the group’s and company’s ability to continue to operate as a going concern,” if moviegoers return slower than it plans, for instance.

“Our responsibility as a management is really to secure for any development that might happen,” said Chief Executive Officer Mooky Greidinger in an interview with Bloomberg TV Thursday. “We really believe when we look at the vaccination situation in the U.S. and in the U.K. that business will be growing quite rapidly, May, June and July.”

The company said Tuesday that it plans to open some screens as early as April 2 in its core U.S. market, and in the U.K. from May 17 in line with government guidance.

(Updates with shares and CEO quote from third paragraph)

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