Cineworld Considering US Stock Listing To 'Maximize Shareholder Value'

Kimberly Redmond  |

Video source: YouTube, Reuters

Cineworld Group plc is eyeing a US listing to tap investors in the movie theater operator’s largest market as part of an effort to shore up its pandemic-strained finances.

On Thursday, London-listed Cineworld said it was considering a plan to list its shares on Wall Street or to do a partial US listing of its Regal Entertainment Group unit.

During a call with investors, Cineworld’s chief executive officer Moshe "Mooky" Greidinger said that the potential listing was just “one of the alternatives” being reviewed, with “many, many aspects” yet to be considered. 

Cineworld, the world’s second-largest movie theater chain after AMC Entertainment Holdings, has gotten most of its profits from the US since is acquired Regal in 2018.

In its interim results statement for the six months ended June 30, 2021, Cineworld said, “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.”
 
“The board is therefore 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.”

Cineworld posted a 59% revenue drop in the first six months of the year as theaters in various parts of the world closed due to a resurgence in COVID-19 outbreaks.

Total revenue for the period fell to $292.8 million “due primarily to the 70.3% decline in admissions,” the company said.

Cineworld, which had net debt of $8.44 billion as of the end of June, said cash burn was $271 million in the first six months of the year, while losses narrowed to $576.4 million from $1.64 billion last year thanks to tighter cost control.

As one point last year, Cineworld shuttered almost all of its cinemas, leaving thousands of employees out of work as the company tried to preserve cash to get through the crisis.

“While our results still carry the effect of COVID and related lack of product, we are encouraged by the upcoming lineup of big releases, especially for the upcoming four months. This will include four new Marvel movies as well as Top Gun Maverick, the new Bond, Matrix, Dune and many more. Nonetheless, we will need to remain alert to any new COVID-related developments — currently, it appears that the booster vaccination is on its way but as we have seen in the past, we need to be reactive and ready to handle all scenarios,” Cineworld said.

As of June, all of Cineworld’s 759 locations are open, and ticket sales are now at more than 50% of pre-pandemic levels, as the US and UK have eased lockdown measures and ramped up vaccination efforts, the company said.

Bloomberg News noted that, despite the pandemic, Cineworld’s rival, AMC, saw its shares surge this past spring after becoming a so-called “meme” stock on Reddit. US retail investors piled into the stock in May, driving it from single digits to a peak of $72.62 in early June. 

Shares have since settled to $33.07 at Thursday's close, giving AMC a market capitalization of nearly $17 billion. By contrast, Cineworld, which closed at 63.66p in London Thursday, has a market cap of 874 million ($1.2 billion).

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Source: Equities News

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