CINEWORLD GROUP CLOSES ALMOST 700 OUTLETS IN THE USA AND UK

The work of the world's second largest cinema theaters chain has been suspended this Thursday. It is planned to close 536 outlets in the United States and 127 offices in the United Kingdom. The reason for the shutdown was the coronavirus pandemic. The company stated it would not be able to show visitors the full range of major commercial cinematic projects until COVID-19 looses its grip.

Experts note that more than 45 thousand employees are at risk of losing their jobs.

However, Cineworld's business problems don't end there. The company's aggressive expansion into the market has already resulted in $ 8.2-billion debt. The chain's shares fell almost by 60% amid loud announcements of the shutdown, complicating the already difficult financial position of the company.

The company previously announced the losses of $ 1.6 billion that occurred due to the pandemic in the first half of the year. Amid a rapid decline in revenue (67% in January-June), the company is looking for a way to increase liquidity.

According to analysts, closing of the cinema theaters brings the company a monthly loss of $ 60 million. At the end of August, the Cineworld Group still had about $ 150 million in cash in its accounts, as well as an unused credit line in the amount of $ 110 million.

In this situation, it is clear that the prolonged downtime period of cinemas in key markets, such as the United States and the United Kingdom, could lead to a violation of the existing terms of the loan agreements. The company is actively negotiating with a syndicate of 11 lending institutions, including HSBC and Citigroup, in an effort to have a respite and get out of debt. Last week, the FTI Consulting Company was invited to participate in the negotiations.

An additional factor for the closure of cinemas was not only the drop in sales, but also the decision of filmmakers to postpone the premiere screenings of many films, which were expected to be released at the end of 2020. Universal has reported it is postponing its next James Bond movie premiere until next April. Many other premieres have been postponed ("Black Widow", "Argument", "Wonder Woman 1984"). Some projects have even been released digitally before reaching cinemas (for example, Disney's Mulan).

The decision to close the outlets of the Cineworld Group poses a difficult dilemma to the enterprises of competitors. For example, the Vue cinema chain, which manages 228 projects in 10 markets, has already announced that it does not exclude the possibility of closure of the cinemas. Another competitor, Odeon, has also been forced to cut shows at nearly 30 out of 120 UK and Irish establishments. 16 cinema theaters of the network are still closed.