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Cineworld shutters US, UK theatres putting 45,000 jobs at risk
5th Oct 2020 07:00
(Sharecast News) - Cineworld on Monday confirmed it would temporarily suspend operations at all of its UK and US theatres from Thursday due to the Covid-19 pandemic, putting 45,000 jobs at risk.
The company cited an "increasingly challenging theatrical landscape and sustained key market closures" adding that the move would hit 536 Regal theatres in the US and 127 Cineworld and Picturehouse theatres in the UK.
Cineworld had been hoping for a boost from the latest James Bond film No Time To Die, but this has been postponed twice and is now due for release in April 2021.
Shares in the firm plunged on Monday, which will also hit the family of chief executive Moshe Greidinger, as it owns a one-fifth stake in the business via Global City Theatres, a holding which was refinanced as recently as September.
"As major US markets, mainly New York, remained closed and without guidance on reopening timing, studios have been reluctant to release their pipeline of new films," Cineworld said in a statement.
"In turn, without these new releases, Cineworld cannot provide customers in both the US and the UK - the company's primary markets - with the breadth of strong commercial films necessary for them to consider coming back to theatres against the backdrop of Covid-19."
The Sunday Times reported that the company was writing to Prime Minister Boris Johnson and Culture Secretary Oliver Dowden to say the industry is now "unviable".
AJ Bell investment director Russ Mould said the the £1.6bn debt pile it inherited with the £2.3bn 2018 purchase of Regal was now "crushing the group".
"While no-one could have foreseen a pandemic, its duration or its impact upon major leisure groups, Cineworld was already facing the threat of streamed content from Netflix, Amazon and others. As a result of the Regal deal it doubled-down and increased its exposure to unpredictable film release schedules that had themselves become increasingly reliant upon a few smash-hit franchises, such as Marvel's super-hero series and Star Wars."
"Cineworld left itself more exposed to any unexpected downturn in trading than would have otherwise been the case. The results for the first-half of 2020 show cash balances of $285m, set against borrowings of $4.2bn and lease liabilities of a further $4.3bn and in the first six months of the year lease payments of $166 million easily outstripped interest payments of $41m."
"There will doubtless be more than a few nervous commercial property landlords looking at Cineworld's decision to mothball 763 cinemas in the UK and USA, in addition to 45,000 very concerned employees.
The company cited an "increasingly challenging theatrical landscape and sustained key market closures" adding that the move would hit 536 Regal theatres in the US and 127 Cineworld and Picturehouse theatres in the UK.
Cineworld had been hoping for a boost from the latest James Bond film No Time To Die, but this has been postponed twice and is now due for release in April 2021.
Shares in the firm plunged on Monday, which will also hit the family of chief executive Moshe Greidinger, as it owns a one-fifth stake in the business via Global City Theatres, a holding which was refinanced as recently as September.
"As major US markets, mainly New York, remained closed and without guidance on reopening timing, studios have been reluctant to release their pipeline of new films," Cineworld said in a statement.
"In turn, without these new releases, Cineworld cannot provide customers in both the US and the UK - the company's primary markets - with the breadth of strong commercial films necessary for them to consider coming back to theatres against the backdrop of Covid-19."
The Sunday Times reported that the company was writing to Prime Minister Boris Johnson and Culture Secretary Oliver Dowden to say the industry is now "unviable".
AJ Bell investment director Russ Mould said the the £1.6bn debt pile it inherited with the £2.3bn 2018 purchase of Regal was now "crushing the group".
"While no-one could have foreseen a pandemic, its duration or its impact upon major leisure groups, Cineworld was already facing the threat of streamed content from Netflix, Amazon and others. As a result of the Regal deal it doubled-down and increased its exposure to unpredictable film release schedules that had themselves become increasingly reliant upon a few smash-hit franchises, such as Marvel's super-hero series and Star Wars."
"Cineworld left itself more exposed to any unexpected downturn in trading than would have otherwise been the case. The results for the first-half of 2020 show cash balances of $285m, set against borrowings of $4.2bn and lease liabilities of a further $4.3bn and in the first six months of the year lease payments of $166 million easily outstripped interest payments of $41m."
"There will doubtless be more than a few nervous commercial property landlords looking at Cineworld's decision to mothball 763 cinemas in the UK and USA, in addition to 45,000 very concerned employees.