Raising Funds to Cover Losses
Cineworld reported falling business revenues by over 80% to $852 million from $4.3 billion in 2019. A pre-tax loss of $3.01 billion compared with a profit of $212 million made in a year-ago period. The movie company said that admissions crashed by 80% to $54 million from $275 million in 2019.
“I never imagined a time that we would see the closure of our entire cinema estate. Nor that varying restrictions would remain in place for so long as we continue to navigate our way through the crisis,” said Mooky Greidinger, chief executive of the company.
Following huge losses it suffered in 2020 and a high degree of uncertainty into the opening months of 2021, the movie company is looking to raise $213 million to improve its liquidity. In November last year, the company secured $750 million in funding to survive.
The cinema business is hoping to capitalize on the faster-than-expected vaccine rollout in the United States (US) and United Kingdom (UK). The new cash injection will help the movie company to support the reopening process.
“Strong pent-up demand for affordable out-of-home entertainment anticipated post re-opening due to the COVID-19 pandemic as indicated by the theatrical industry performing well in re-opened markets such as China, Japan and Australia,” Cineworld said in a statement.
The movie business insists that it still has enough funds to sustain “any further closure periods,” as it has already raised more than $1 billion in new funds to bolster its balance sheet.
British cinema chains are hoping to start reopening theaters starting next month. Cineworld is due to begin reopening cinemas from April 2 in the US and from May 17 in the UK, where the company is the biggest cinema chain operator with 127 locations.
“We will also be monitoring developments closely in the UK and across Europe as we set to gradually reopen across the world in line with local government guidance,” Greidinger added.
Given that the US market accounts for around three quarters of annual business revenues for Cineworld, the company can run its movie business without losses even with half-full cinemas, as it is regulated by COVID-19 regulations in most US states.
Two days ago, the movie company announced a multi-year deal with Warner Bros to exclusively show new releases for 45 days in the US, starting from 2022. Under the terms of the business agreement, Cineworld will have an exclusive period of 31 days to show new releases before they become available for streaming. This period will rise to 45 days for films that can sell more tickets.
Cineworld share price plunged over 10% today to hit a fresh one-month low.
Cineworld, the second-biggest movie business in the world, reported a record loss of over $3 billion for 2020 as the COVID-19 pandemic yielded crashing business revenues by more than 80%.
About the Author
An analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in advanced analytics and media.