Regal Owner Cineworld Reveals Weak Intakes, Warns Of 'Very Significant Dilution' Of Stakes

Exhibition giant Cineworld revealed lower-than-expected cinema admissions, which could potentially lead to equity dilution in the future.

In an update on Wednesday on its current business operations, liquidity position, capital structure and the continued impact of the COVID-19 pandemic on the group, Cineworld said: "Despite a gradual recovery in demand since reopening in April 2021, recent admission levels have been lower than expected. These lower entry levels are due to a limited film slate which is expected to continue through November 2022 and is expected to negatively impact on trading and the group's short-term liquidity position."

Group admissions increased from 54.4 million in 2020 to 95.3 million in 2021.

The company, which owns Regal Cinemas in the United States, posted a pre-tax loss of $708.3 million for the full fiscal year ending December 31, 2021, a marked improvement from the loss of $3 billion in 2020. However, the group's net debt, excluding lease debt, increased by $492.7 million, from $4.33 billion to $4.84 billion.

Cineworld said it was "taking proactive steps to ensure it has the balance sheet strength and flexibility to adapt to market conditions. This includes previously disclosed significant operational and financial initiatives to managing costs and improving liquidity. The group believes these steps are necessary to optimize its ability to maximize business value as the film industry recovers."

"As part of these initiatives, the group is continuing active discussions with various stakeholders and is evaluating various strategic options to both secure additional liquidity and potentially restructure its balance sheet through a comprehensive deleveraging operation," said Cineworld.

"Any deleveraging will likely result in a very significant dilution of existing stakes in Cineworld," the group warned.

In the meantime, it's business as usual for the band. "The group's commercial operations should not be affected by these efforts and Cineworld expects to continue to meet its ongoing commercial counterparty obligations," Cineworld said. "Cineworld continues to welcome guests to its theaters in its global markets as usual, without interruption."

Cineworld operates in 10 countries, including the US and UK, with 751 locations and 9,189 screens worldwide.

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