Cineworld secures $750m lifeline amid hopes delayed blockbusters will hit screens in spring
Cineworld has secured a $750m (£552m) funding lifeline to see it through the coronavirus crisis until a hoped-for reopening of screens in the spring.
Shares in the group – which have lost three-quarters of their value since the start of the year – surged by 20% on the belief that it will now be able to cash in on a bonanza of delayed blockbusters in 2021.
Confidence was also buoyed by increasing hopes that various COVID-19 vaccines will see life start to return to normal next year.
Cineworld said the financial package would give it breathing space to keep going “until lockdown restrictions in key jurisdictions are eased and studios are able to bring their enhanced pipeline of major releases back to the big screen”.
The group said its plan assumed cinemas would be allowed to reopen by May 2021 – and that if they stay shut for longer it might need more support from lenders.
Last month, the company closed 127 Cineworld and Picturehouse cinemas in the UK and 536 Regal sites in the US, putting thousands of jobs on ice.
It has been struggling as blockbuster releases are being held back by Hollywood studios during the pandemic – with notable postponements including new James Bond film No Time To Die.
The announcement of the group’s financial lifeline is the latest in several shake-ups which the company has been forced into since March.
Its latest package includes $450m (£331m) in new loans as well as issuing warrants which could hand around 10% of shares in the company to creditors.
Cineworld has also secured debt waivers until 2022, the extension of a $111m (£82m) line of credit until 2024 and the early repayment of a $200m (£147m) tax rebate.
Chief executive Mooky Greidinger said: “The measures we are announcing today deliver over $750m of extra liquidity to support our business.
“We look forward to resuming our operations and welcoming movie fans around the world back to the big screen for an exciting and full slate of films in 2021.”
The company has put all capital spending on hold and agreed rent deferrals or new lease agreements with landlords as it battles to rein in costs during the lockdown.
It said it would “continue to consider all options to ensure that its business remains viable in light of the uncertainties regarding the duration of the COVID pandemic”.
Analysts at Investec said: “With vaccine development progressing, this should give investors significantly greater confidence in Cineworld emerging from the crisis, allowing the company to capture demand as it returns with a robust slate of postponed films.
“Although recent changes to the theatrical window by peers have captured industry headlines, we continue to believe those will have limited impact on industry box office revenues overall.”