Cineworld will close all its Irish, UK and US cinemas indefinitely, threatening tens of thousands of jobs, after the long-awaited next instalment in the James Bond franchise became the latest movie to be pulled by Hollywood studios.
Shares in Cineworld, which operates the Regal chain in the US alongside Cineworld and Picturehouse in Europe, were down 40 per cent in early afternoon trading in London on Monday as investors feared for the future of the world’s second-biggest cinema group.
Led by chief executive Mooky Greidinger, Cineworld had been banking that high-profile releases such as the Marvel film Black Widow, and the latest instalment of Universal's Fast & Furious franchise, would persuade consumers to brave cinemas even as Covid-19 infections climb again. Their release has now been delayed to the spring of 2021.
Late last week, Hollywood studio MGM postponed the release of No Time to Die, which is Daniel Craig’s final outing as James Bond and was due to begin showing in cinemas on November 12th.
Waive covenants
Cineworld's decision to temporarily suspend its operations in Ireland, Britain and the US from Thursday is the most brutal blow yet to an industry already reeling from the pandemic. About 45,000 staff will be affected by the closures.
In an email sent to staff, Mr Greidinger said the chain had seen audience numbers “dwindle to tiny and unsustainable levels and the delay of Bond has been a huge blow” and that it was reviewing the roles of all staff.
Cineworld’s aggressive expansion has left the group with $8.2 billion in net debt, leaving it particularly vulnerable to a sustained reduction in income. Analysts at Jefferies estimate that with its cinemas shut, Cineworld burns about $50 million to $60 million per month. The group had roughly $150 million in cash at the end of August as well as an undrawn $110 million credit facility.
It is in talks with a syndicate of 11 banks, including HSBC and Citigroup, in an attempt to waive those covenants on borrowing that it expects it will break in December and again next June, and secure some breathing space. – Copyright The Financial Times Limited 2020
