Cineworld rebuffs reports it was in talks with AMC

Cineworld has denied reports that it is in talks with AMC Entertainment over the possible sale of the bankrupt chain’s assets.

AMC, owner of Odeon and the world’s largest cinema company, recently said it had ended negotiations to acquire certain Cineworld cinemas in the US and Europe.

But London-listed Cineworld told investors on Tuesday that neither the company nor its advisers had ever held talks with the US company about such a deal.

It added that it would conduct a marketing process to sell its assets, including the Picturehouse chain and more than 750 cinemas worldwide, as a whole in “pursuit of a value-maximizing transaction.”

The London-listed group said it would approach potential buyers later this month and was not looking for a deal that would involve selling assets separately or redeeming Cineworld itself.

But it warned that any deal “will result in a very significant dilution of the existing equity interests in Cineworld and there is no guarantee of any recovery for the holders of Cineworld’s existing equity interests.”

In September, the world’s second-largest movie theater chain filed for Chapter 11 bankruptcy protection in the US under a huge mountain of debt, piled high by a significant wave of expansion.

The company acquired Regal Cinemas for US$3.6bn (£2.7bn) and agreed to pay £1.5bn for Cineplex before pulling out of the deal in 2020, citing “material adverse consequences and infringements’ by the Canadian entertainment brand.

However, an Ontario judge ordered Cineworld to pay £720 million in damages to Cineplex for breach of obligations.

Cineworld was further hit by lockdown restrictions for much of 2020 and 2021 leading to the temporary closure of cinemas around the world and the delayed production of big budget films.

This resulted in many new movies and drama series being released directly to popular streaming services such as Netflix, AppleTV and Disney+, whose customer numbers are skyrocketing.

Cinemas experienced a strong rebound in volumes as lockdown restrictions were eased, aided in part by the release of blockbusters such as the James Bond film No Time to Die, Dune and Top Gun: Maverick.

But in Cineworld’s most recent half-year results, the company revealed that admissions at its locations remained below pre-pandemic levels and its original 2022 forecast and expects them to fall below expectations for the current fiscal year.

That’s despite the release of superhero movies Black Adam, starring Dwayne Johnson and Pierce Brosnan, Black Panther: Wakanda Forever and the highly anticipated sequel Avatar: The Way of Water.

Cineworld Group Shares fell 8.1 percent to 3.35 pence in early trading on Tuesday, meaning their value is down more than 90 percent in the past 12 months.

Russ Mould, investment director at online trading platform AJ Bell, commented: ‘The reopening of the cinema industry after the pandemic has not been smooth sailing and Cineworld has borrowed time.

“Shareholders have been told on numerous occasions that their investment could dilute significantly in the event of a restructuring or sale of the company, so the situation is more about getting pennies back in the pound rather than waiting for a big payday.”