Cineworld has reported a record $2.3bn loss and is turning to shareholders for permission to suspend its borrowing limits, allowing it to raise debt for the third time during the pandemic.
The cinema group said on Thursday that it had secured commitments for a $213m convertible bond maturing in 2025, which would provide a “significant liquidity buffer” to see it through the reopening of its cinemas. The debt is subject to the approval of Cineworld’s investors who will have to agree to pause the London-listed company’s borrowing limits in a vote on April 12.
The closure of Cineworld’s 767 cinemas for the majority of the year pushed the group to report a $2.3bn operating loss for 2020, compared with a profit of $725m in 2019. Revenues for the year were down 80 per cent to $852m.
“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 this crisis,” said chief executive Mooky Greidinger.
Cineworld plans to reopen cinemas in the US, its biggest market, from the beginning of April in time to coincide with the release of the Warner Bros movie Godzilla vs Kong, it said this week. It has signed a deal with Warner Bros to secure the release of its films in its cinemas for 45 days before the studio can load them on to its streaming platform HBO Max.
It plans to open in the UK from May 17. Cineworld however said on Thursday that its recovery was likely to be “volatile” given uncertainty around reopening restrictions, the number of films available and the desire of consumers to return.
It said in its base case scenario it was forecasting for all of its cinemas to be reopen in May but to only achieve 60 per cent of 2019’s admissions. It did not expect to recover to 2019’s admissions numbers until 2023 and added that there was “material uncertainty” over its ability to continue as a going concern.
Losses as a result of the pandemic and the need to raise extra financing increased Cineworld’s net debt to $8.3bn.