Stocks in British cinema chain Cineworld (LON: CINE) fell almost 7% as it was reportedly considering launching a CVA amid ongoing financial difficulties.
CVA – a common bankruptcy procedure among companies seeking to cut costs – helps to remove pressure from Cineworld’s increased debt crisis.
There are rumours that up to 127 people in UK cinemas may have to permanently close the door as part of their placement if a CVA is agreed, but sources close to Cineworld warn that no deals are being made at this stage.
In addition to sour news, the owner of London’s Entertainment Complex Strocadero Centre today filed a High Court claim against Cineworld, suing for £1.4 million against an unpaid bill.
Shares in the chain were 6.81% to 45.10p at 13:23 GMT on Thursday, following a disappointing year at an annual low of 21.38p per year in March, when the UK began its first lockdown.
Cineworld’s stock hit Rosier 52.98p earlier this week behind the promising vaccine development news, but CVA rumors are no surprise to hopes of an imminent recovery.
The chain’s dividend yield is 13.03% and the P/E ratio is 3.00, with 63.82% of MarketBeat’s community voters listing the chain as “outperformers” compared to the S&P 500 average.
However, Cineworld was listed by City AM as one of the top 10 most shorted stocks as of November 12th. An analysis by currency trading fund provider Granite stocks shows that last week there was a shortfall of 9.5% of the film’s stocks.
