Since news first broke on 19 August that Cineworld was looking at filing for insolvency in the United Kingdom and bankruptcy in the United States, it feel as if each passing week is a guessing game for when the company will make the move official. Yet despite all the industry watchers waiting to pounce on the world’s second largest exhibition chain the moment it confirms any form of financial restructuring, Cineworld has been rather opaque about where they stand in the process, issuing only a single statement on 22 August:
“Cineworld and Regal theatres globally are open for business as usual and continue to welcome guests and members. Cineworld would expect to maintain its operations in the ordinary course until and following any filing and ultimately to continue its business over the longer term with no significant impact upon its employees.”
Over the past week the company’s second largest shareholder, the Chinese firm Jangho Group, reduced its stake in the company from 11.6% to 1.6%. As well, the landlord for its Picturehouse cinema in Piccadilly sent the exhibitor a “winding up petition” in a move to evict the company over past-due rent. Then it was revealed that Cineworld incorrectly reported its largest shareholder in its annual report. Nevertheless, shares in Cineworld on the London Stock Exchange are up over 40% to 4.07p since the news of the potential bankruptcy broke. Granted, the share price is down 85% from where it started the year at 32.68p.
While a bankruptcy filing still looks likely after Labor Day in the US, we have our own take on how Cineworld wound up in this position and the Financial Times describes how the company’s desire for expansion left it with a heavy debt load on the brink of collapse.