Cineworld is reportedly preparing to file for bankruptcy after Covid essentially halted sales, with the industry one of the toughest hit during the pandemic.
The company, which is listed in London, operates 751 sites across 10 different countries, but has run up debts of around £4 billion after a tough couple of years financially.
Cineworld is the world’s second largest cinema chain, but its recovery post-pandemic has been slow after losses soared during the coronavirus crisis.
According to the Wall Street Journal, the company is expected to consider insolvency proceedings in the UK.
The share price of Cineworld absolutely tanked from 20p to 2p following the news, with the chain trading at £1.97 before the pandemic hit.
The market value of Cineworld halved earlier this week, after news emerged that Cineworld had started talks with stakeholders regarding a financial ‘rescue package’.
The company blamed a lack of blockbuster films for the admissions being low.
Since the pandemic, thanks to releases such as James Bond’s ‘No Time To Die’ and Spider-Man’s ‘Far From Home’ revenues more than doubled from $852m to $1.8bn last year.
Speaking to the Guardian, Walid Koudmani, chief market analyst at financial brokerage XTB said: “The firm will blame the lack of summer blockbusters as a reason behind its sharp downfall but in reality its aggressive acquisition plan has taken on too much debt and this was always a huge risk as interest rates rise.
“Moreover, the move to stay at home entertainment and streaming providers has created a pivotal shift in the way consumers enjoy films, and Cineworld simply has not adapted fast enough. It’s all quite sad as the UK’s high street will now likely lose a popular and familiar brand name.”
The group saw around 95 million people flock to their cinemas in 2021, which was a 75 percent increase on 2020. However, pre-pandemic, around 275 million attended Cineworld’s multiple venues.