Cineworld is looking at options to raise more cash after warning that there remained “material uncertainty” over its ability to pay down debt and continue as a going concern despite the return of blockbuster films to cinemas.
The world’s second-largest cinema company said on Thursday that its board was considering “several options with regard to additional sources of liquidity” in light of a slow return to 2019 levels of cinema admissions and uncertainty over whether it would be able to meet debt obligations due in June this year.
The cinema chain is also facing a bill of more than $900mn in damages for pulling out of its $2.1bn attempted takeover of the Canadian group Cineplex, which it abandoned in June 2020.
Cineworld is appealing against the Canadian court’s decision but said that it had not recognised the liability on its balance sheet as it did not think it would be resolved until after June 2023, the end of the group’s assessment period for its finances.
But it warned: “In the event that Cineworld is unsuccessful on appeal, the group would not have sufficient liquidity to pay the existing level of damages awarded.”
Despite raising more than $402mn in liquidity over the past year, Cineworld’s net debt, excluding lease liabilities, increased from $4.3bn in 2020 to $4.8bn in 2021.
Cineworld’s estimate that cinema admissions will not return to 2019 levels before the end of 2023 makes the cinema sector one of the slowest to recover from the trials of the pandemic, during which populations around the world signed up in droves to online streaming services to see them through lockdowns.
Mooky Greidinger, Cineworld’s chief executive, said he was encouraged by strong trading in the final quarter of last year, thanks to the release of the Marvel film Spider Man: No Way Home, which demonstrated “pent-up demand for affordable out-of-home entertainment”.
Revenues in the year to the end of December more than doubled to $1.8bn compared with 2020 but were still down 58 per cent against 2019. Pre-tax losses narrowed from $3bn to $708mn.