- Cineworld, the owner of Regal Cinemas, said Friday its shareholders could be wiped out.
- The warning comes as the company failed to land a cash offer to take over the entire business.
- Cineworld shares sank in UK and US trading on Friday.
cineworldwhich runs Regal Cinemas, said its shareholders may not recoup their investment, with the warning coming on Friday as the struggling company continues to work to emerge from bankruptcy protection.
The UK-based company was looking for potential buyers to buy the company that runs Regal, the second-largest movie theater chain in the United States behind AMC Theaters. It filed for Chapter 11 bankruptcy in September, in a bid to reorganize after the movie and wider entertainment industry were hit hard by the COVID pandemic. Last year, AMC said it had ended talks to buy venues from rival.
cineworld said in a UK regulatory filing he had received non-binding proposals to buy parts or all of his business, but none of them involved a cash offer for the entire company. The company said it was reviewing proposals with advisors and key stakeholders.
However, “based on the proposals received to date, a sale transaction is not expected to provide any recoupment to holders of the company’s interests,” Cineworld said.
It is also unlikely that the stakes will be recovered under a restructuring plan, as the company anticipates insufficient support from creditors.
On Friday, Cineworld shares fell 43% to £2.25 ($2.69) in trading on the London Stock Exchange on Friday. U.S.-listed shares fell 29% to $0.034.
Cineworld said it may be able to exit Chapter 11 in the first half of this year based on discussions between itself and certain stakeholders, but no decision on transactions has yet been made.
Regal Cinemas had approximately 500 locations in the United States. Cineworld has already closed some sites, a move it said would help it save $22 million a year.