Stocks of Cineworld (LON: Cine), the world’s second-largest film chain, have lost more than 22% behind the news that it has secured exemptions against its debt deadline until June 2022, and has won £336 million on new loans to help it see it throughout the rest of the pandemic.
The chain temporarily closed all UK and US sites in October, but today’s move says it will “provide financial and operational flexibility to Cineworld” until lockdown restrictions in key jurisdictions are eased and studios can bring their enhanced pipelines of major releases back to the big screen.
Among the new terms are stock warrants worth around 11% of the equity capital, and debt measures are set to provide additional liquidity of over £233 million, reducing monthly cash expenditures to around £45 million.
Cineworld also extended its £83 million incremental revolving credit facility from December 2020 to May 2024, moving forward with an estimated tax refund of over £150 million in early 2021.
Cineworld CEO Mooky Greidinger welcomed the chain’s news.
“In the long term, operational improvements since the start of the pandemic will further increase Cineworld’s profitability and resilience.
“This group continues to monitor the development of the relevant markets in which we operate, and our entire team is focusing on cost-based management.
“We look forward to bringing movie fans around the world back to the big screen in search of an exciting, complete film slate for 2021.”
Cineworld’s debt relief news sent the company’s shares up 22.37% at lunch on Monday, 23/11/20, following from a very turbulent year with a price of 15.64p per year in March, with a maximum of 56.40p.
In recent weeks, stock price advantage has increased by 42.45% last month. We hope that vaccine development efforts will fuel the film industry and that a post-pandemic world could be on the horizon.
Commenting on Cineworld’s news, Investec (LON:INVP) analysts said:
“As vaccine development progresses, this will bring great confidence in investors in Cineworld, emerging from the crisis, allowing investors to gain demand when they return with the robust slate of postponed films.
“Recent changes to the theatre window by peers capture industry headlines, but we continue to believe that the impact on industry-wide revenue is limited.”
