Aug 12, 2021
Cineworld weighs U.S. listing in challenge to meme stock AMC
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Cineworld Group Plc is weighing a U.S. listing to tap investors in the movie theater operator’s biggest market as it tries to bounce back from the coronavirus pandemic. The company’s shares jumped as much as 10 per cent.
London-listed Cineworld gets most of its profits from the U.S. since it acquired Regal Entertainment Group in 2018. COVID-19 lockdowns have been disastrous for the industry, shuttering hundreds of theaters and delaying blockbuster releases.
Cinemas are also threatened by studios bypassing the big screen to send some big-budget titles straight to their streaming platforms.
All that hasn’t stopped shares in Cineworld rival AMC Entertainment Holdings Inc. surging in the past year after it became a so-called meme stock on Reddit and other platforms. U.S. retail investors have piled into AMC stock, pushing it far above the fundamental value ascribed to it by analysts.
AMC now commands a market capitalization of around US$16 billion versus US$1.3 billion for Cineworld.
Cineworld’s board is “considering options to maximize shareholder value now and into the future by accessing this liquidity through a listing of Cineworld or a partial listing of Regal in the U.S.,” the company said in its first-half results statement Thursday.
Cineworld shares were up 8 per cent as of 9:34 a.m. in London.
Potential U.S. listings for Cineworld or Regal are “just ideas” for now, Chief Executive Officer Mooky Greidinger told Bloomberg, playing down the idea that it might quit the London Stock Exchange.
“We are a U.K. company with a U.K. listing,” he said in an interview.
Greidinger said Cineworld has reduced its cash burn and “we are in a good place,” with a string of upcoming blockbuster releases including long-delayed James Bond movie “No Time to Die,” a fourth installment of “The Matrix” and four Marvel titles in four months.
The world’s second-biggest theater chain has bled cash through the pandemic and needs audiences to return in big numbers to avoid breaching debt covenants. Cineworld said it should be able to operate within its current borrowing facilities for at least a year.
“However, the covenants are forecast to be breached at June 30, 2022 under the group’s severe but plausible downside forecast,” it said in its earnings statement.