Cineworld has denied reports it is in discussions with AMC Entertainment over the potential sale of the bankrupt chain’s assets.
AMC, which owns Odeon and is world’s largest movie theatre business, said recently it had terminated negotiations regarding the takeover of certain Cineworld cinemas in the US and Europe.
But London-listed Cineworld told investors on Tuesday that neither the firm nor its advisers had ever conducted talks with the American company regarding such a deal.
Discussions: Cineworld told investors on Wednesday that it had never conducted talks with AMC regarding the takeover of certain Cineworld cinemas in the USA and Europe
It added that it would administer a marketing process to sell its assets, which includes the Picturehouse chain and over 750 cinemas worldwide, as a whole in ‘pursuit of a value-maximising transaction’.
The London-listed group said it would approach any potential buyers later this month and was not seeking a deal involving assets being sold individually or the offloading of Cineworld itself.
But it warned that any agreement ‘will result in a very significant dilution of existing equity interests in Cineworld and there is no guarantee of any recovery for holders of Cineworld’s existing equity interests’.
In September, the world’s second-largest cinema chain applied for Chapter 11 bankruptcy protection in the US under a huge debt pile, built high by a significant expansion spree.
The firm acquired Regal Cinemas for US$3.6billion (£2.7billion) and agreed to pay £1.5billion for Cineplex before backing out of the deal in 2020, citing ‘material adverse effect and breaches’ by the Canadian entertainment brand.
However, a judge in Ontario ordered Cineworld to pay £720million in damage to Cineplex for breaching obligations.
Cineworld was further impacted for much of 2020 and 2021 by lockdown restrictions leading to cinemas across the world temporarily closing and the delayed production of big-budget films.
This caused many new movies and drama series to be directly released on popular streaming services such as Netflix, AppleTV and Disney+, whose customer numbers have all skyrocketed.
Cinemas saw a strong rebound in volumes as lockdown curbs were loosened, partly buoyed by the release of blockbusters like James Bond film No Time to Die, Dune and Top Gun: Maverick.
Yet in Cineworld’s most recent half-year results, the company revealed admissions to its venues remained below pre-pandemic levels and its initial 2022 forecast and is anticipating them to stay below expectations for the current financial year.
That is despite the release of superhero movies Black Adam, starring Dwayne Johnson and Pierce Brosnan, Black Panther: Wakanda Forever, and the long-awaited sequel Avatar: The Way of Water.
Cineworld Group shares fell 8.1 per cent to 3.35p in early trading on Tuesday, meaning their value has declined by more than 90 per cent in the past 12 months.
Russ Mould, investment director at online trading platform AJ Bell, commented: ‘The reopening of the cinema industry post-pandemic has not gone smoothly, and Cineworld has found itself on borrowed time.
‘Shareholders have been told on numerous occasions that their investment could be significantly diluted upon any restructuring or sale of the business, so the situation is more about getting back pennies in the pound rather than waiting for a big payday.’
