Cineworld to File for Administration in UK, Shareholders to be Wiped Out

Cineworld, the troubled cinema chain, has announced plans to file for administration in the UK as part of a restructuring plan that will see shareholders wiped out. The world’s second-largest cinema chain has been struggling with mammoth debts and weaker-than-hoped audience numbers, leading to a Chapter 11 bankruptcy filing in the US last year.

Despite the administration plans, Cineworld has assured that its British operations will not be affected, with cinemas continuing to remain open as usual. The company, which has 128 cinemas across the UK and Ireland, is moving forward with a plan to restructure its roughly five billion US dollars debt pile.

The restructuring plan aims to reduce debts by around 4.53 billion US dollars through a rights offering and new debt financing, while also securing support from most of its lenders. However, this will come at a cost for shareholders, who are set to be wiped out in order to support the company’s lenders and creditors.

Shares in Cineworld fell by more than a quarter on Monday morning following the news of the administration plans, adding to a nearly 99% drop in stock value over the past five years. The pandemic has hit the cinema chain hard, forcing it to close some of its sites and leading to financial struggles.

Despite the challenges, Cineworld remains committed to operating its global business and cinemas without interruption. The company’s brands, including Regal, Cinema City, Picturehouse, and Planet, are continuing to welcome customers to cinemas as usual.

Cineworld hopes to emerge from bankruptcy protection in July after receiving backing for its overhaul from most of its lenders. The company also recently scrapped plans to sell its businesses outside the UK, US, and Ireland after potential bidders failed to meet the desired value set by Cineworld’s lenders.