Cineworld, the parent company of Regal Cinemas, said it expects shareholders to be wiped out entirely after filing for Chapter 11 bankruptcy protection last year.
By law, common stockholders are the last to get paid in a company’s bankruptcy, meaning shareholders should not expect to recover any funds from a restructuring or sale, according to KESQ.
Cineworld is the second-largest movie theater operator behind AMC, which said in December that it was no longer in talks to purchase theaters from Cineworld, per CNBC.
Cineworld said it had received several non-binding offers to buy some or all of its business. Still, no proposal involved an all-cash bid for the entire company, according to a UK regulatory filing.
“Based on the proposals received to date, it is not expected that any sale transaction will provide any recovery for the holders of the company’s equity interests,” Cineworld said in the filing.
Shareholders would not recover any funds in a restructuring either, “in light of the level of existing debt that is expected to be released under any plan,” Cineworld said.
Like all movie theater companies, the pandemic shutdowns hit Cineworld hard, and the movie theater industry continues to struggle with recovering attendance. Cineworld lost $2.7 billion in 2020, $566 million in 2021, and $294 million in the first six months of 2022, according to CNN.
In January, Cineworld said it would close an additional 39 theaters, saving the company $22 million annually, according to CNN.
Despite the strong performance of box office hits, such as Avatar: The Way of Water and Top Gun: Maverick, theater attendance in 2022 was 52% less than in 2018, according to Indiewire.
Cineworld Group plc shares were down 36% on Friday, closing at 0.031.
According to a report titled “Movie Theater Market Size, Share & COVID-19 Impact Analysis, By Product Type (3D Screens and 2D Screens), By Application (Drive-in Theater, IMAX Theater, Independent Theater and Multiplexes), and Regional Forecasts, 2023-2030,” although the overall market size was $67.9 billion in 2022, the industry is expected to be worth $92.4 billion by 2030, per Markets N Research.