Cash-strapped Cineworld Group, the major theatrical chain that has 759 sites around the world including the Regal cinemas in the U.S., reported tough financials today after six months of pandemic-induced closures and noted that it may be eyeing a stock listing in New York.
The stock is currently traded on the London Stock Exchange, where it gained nearly 6%. The company said a listing across the pond would boost its exposure with North American investors and analysts and allow it to tap U.S. capital markets.
“Following the acquisition of Regal in 2018, Cineworld derives the substantial majority of its revenues and profits from the US, which remains a key market for future growth. US equity capital markets are the largest and most liquid in the world and include a large number of publicly listed cinema companies including peer group companies. These companies are typically covered by a significant number of North American equity analysts with a wide domestic investor following,” said CEO Mooky Greidinger.
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“The Board is therefore considering options to maximise shareholder value now and into the future by accessing this liquidity through a listing of Cineworld or a partial listing of Regal in the US. The Board will evaluate these options over the coming months and will consult with shareholders in due course if any formal proposals are to be made.”
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It could move, list on both exchanges or launch an initial public offering of Regal, which accounted for the bulk of sales. Execs said no decision has been made. On a webcast after the earnings he stressed discussions were very preliminary and no decision had been made yet.
It’s not clear if the meme-stock phenomenon which has seen individual investors shower love on AMC shares, in any ways informs Cineworld’s thinking. Other publicly traded theater chains like Cinemark have not benefitted from that bonanza.
The company saw overall revenue slide from $712.4M in H1, 2020 to $292.8M in H1, 2021. The numbers come off the back of admissions dropping from 47.5M to 14.1M in the same period, following shutdowns across its global estate that were widespread from January to April/May this year.
However, the Group said that all its site across the U.S. and Europe had now reopened and the majority of capacity restrictions have been lifted. It added that admissions were beginning to recover.
A strong film slate in Q4, featuring titles including Top Gun Maverick, James Bond pic No Time To Die, Matrix and Dune, plus four Marvel movies, are expected to boost cinemas. However, the group warned that the ongoing uncertain situation meant it needed to “remain alert to any new Covid-related developments”.
In a statement supporting the H1 results, CEO Mooky Greidinger said that he expects the ongoing theatrical window experimentation from the major studios to stabilize next year to “somewhere between 20 and 60 days… subject to each movie’s potential”.
Despite the tough set of results, Cineworld shares responded positively today, rising more than 7.5% in early trading.
Cineworld recently secured $200M in additional loans as it looks to ride out the pandemic.
Jill Goldsmith contributed to this report
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