Cineworld, the U.K.-based parent company of Regal Cinemas, is filing for bankruptcy, the Wall Street Journal reported on Friday.
The news comes after Cineworld’s stock price dropped by more than half on Wednesday, which itself came after reporting lower-than-expected ticket sales. Shares were trading at £9.50 on the London Stock Exchange, down from £20.80 at market close on Tuesday.
“Despite a gradual recovery of demand since re-opening in April 2021, recent admission levels have been below expectations,” the company said in an update on Wednesday. “These lower levels of admissions are due to a limited film slate that is anticipated to continue until November 2022 and are expected to negatively impact trading and the group’s liquidity position in the near term.”
A spokesman for Cineworld told TheWrap said reports of a bankruptcy filing were premature, and that the company was “proactively evaluating strategic options at this time.”
According to the Wall Street Journal, which first reported the news Friday, Cineworld has enlisted lawyers from Kirkland & Ellis LLP and consultants from AlixPartners to advise on the process, as the company is expected to file a chapter 11 petition in the U.S. and is possibly an insolvency proceeding in the U.K.
Regal Cinemas was hit hard in the pandemic, losing $3 billion in 2020 and nearly $710 million before tax in 2021. Through the end of May this year, only 28 films debuted in wide release as compared to 42 films through the same span in 2019.
“All of our Cineworld and Regal theatres are open for business as usual, and we continue to welcome our guests and members to our cinemas globally,” Cineworld said in a statement Friday. “As we announced earlier this week, we are proactively evaluating strategic options to ensure we have the balance sheet strength and flexibility to adapt to market conditions, and that process remains ongoing. We are committed to our customers’ experience and to being the ‘Best Place to Watch a Movie.’”
Cineworld assured shareholders earlier this week that it would explore alternatives to address its financial situation, promising that it was “taking proactive steps to ensure it has the balance sheet strength and flexibility to adapt to market conditions.” That included “significant previously disclosed operational and financial initiatives to manage costs and enhance liquidity. The group believes these steps are required to optimize its ability to maximize enterprise value as part of the recovery in the cinema industry.”