Cineworld is considering filing for bankruptcy as the chain battles a drop in blockbuster-releases as well as a hangover from the pandemic.
The firm, which operates in eight European countries, made the announcement on 22 August after financial difficulties for the Cineworld Group PLC were reported last week in the American press.
The UK-based company has racked up roughly €4.8 billion in debt which it is struggling to finance after a slow-start recovery from COVID-19 lockdowns.
After reports on Friday about the finances of the company, which is the second largest cinema chain in the world, its stock crashed by more than 60 per cent.
According to box office insights group Comscore 2019 saw record profits for the industry of around €42 billion, but the sector has struggled to recover.
Cinemas the world over were forced to close their doors during the pandemic and have had a rocky road back to profitability thanks to a combination of a backed-up production pipeline in Hollywood and the growth of straight to streaming releases.
In 2022 roughly one third fewer wide-release movies went out to theatres compared with the years before the pandemic, meanwhile one of the summer’s most-watched movies, the Ryan Gosling-Chris Evans action thriller ‘The Gray Man,’ played on Netflix.
What will the Cineworld bankruptcy mean for Europe?
Cineworld operates in 10 countries across the world including the UK, Ireland, and the US.
Outside of the English speaking world, the chain has a large presence in eastern-Europe with 18 premises in Hungary, 13 in the Czech Republic, three in Slovakia, seven in Bulgaria, 28 in Romania and 34 in Poland.
The Cineworld Group is listed on the London Stock Exchange and after acquiring Picturehouses Cinemas in 2012 has 127 cinemas across the UK.
The group has so far assured customers it will be business as usual and there will be no closures, equally telling its 28,000 employees no jobs are at risk.
Last year the company tapped the stock market to raise cash, taking advantage of a huge run-up in its share price when it got caught up in the frenzy surrounding so-called meme stocks.
Its shares rose sixfold in January 2021 and then more than doubled that May and again in June.
The gains were driven by hordes of amateur investors, with some referring to themselves as ‘apes’ willing to hold the stock regardless of whether professional Wall Street called it a bad buy.
