(Reuters) -Cineworld is the second largest movie theatre chain in the world. It warned on Monday that it may have to file for bankruptcy as it tries to pay off debts that grew during the pandemic.
The owner of Regal cinemas in the United States, which had $8.9 billion in net debt at the end of 2021, said last week that people weren’t going to the movies because there weren’t enough blockbusters, which was hurting the company’s cash flow.
At the end of trading on Friday, the UK-based company, which is still hurting from its failed attempt to take over a Canadian rival, was worth only 56 million pounds ($66 million).
It had already said that it was looking at ways to possibly restructure its balance sheet, and on Monday it said that a voluntary Chapter 11 bankruptcy filing in the United States was one option.
The Wall Street Journal was the first to report the possible move, which sent shares of the London-based company to a record low on Friday.
“Cineworld would expect to keep doing business as usual until and after any filing,” the company said on Monday.
The company said that it was in talks with many of its major stakeholders, such as lenders and legal and financial advisors, and that any deleveraging transaction would lead to a very big drop in the value of existing equity interests.
Even though it survived the pandemic, its recovery is in danger because there aren’t as many big-budget movies coming out and online streaming is becoming more popular. AMC Entertainment (NYSE:AMC) also said that the third quarter would be hard because there aren’t many movies coming out.
Cineworld gave up on a plan to buy rival Cineplex two years ago. It is also in the middle of a legal battle with the Canadian company, which wants $946 million in damages from Cineworld for backing out of the deal.
Cineworld has grown around the world by buying other companies, like when it bought Regal Entertainment in 2017 for $3.6 billion.
The company has to pay money to unhappy former Regal shareholders, which puts even more strain on its finances.
In early trades, Cineworld’s shares were volatile and went for about 4.3 pence. In 2017, it reached a high of more than 310 pence.
($1 = 1.3006 Canadian dollars)
$1 is worth 0.8471 pounds.
