45,000 employees affected as Cineworld shuts theatres

Cineworld Group PLC said it will temporarily suspend operations at all its American and British movie theatres now that crucial income from winter blockbusters has been pushed into 2021 by the coronavirus pandemic.

The world’s second- biggest cinema chain will on Thursday close its 536 Regal theatres in the U. S. and its 127 British locations, including the Picturehouse brand, affecting about 45,000 employees, the company said in a statement Monday.

After dropping as much as 60 per cent the shares pared losses to a 36 per cent decline at close in London. They’ve declined about 89 per cent so far this year.

It is now “almost certain” that Cineworld will have to raise additional funds, Natasha Brilliant, an analyst at Citigroup Inc., wrote in a note to clients Monday. The London- listed chain has already said that all funding options are being considered to weather the pandemic, including obtaining around US$ 200 million to US$ 300 million of new funds.

“With a prolonged period of closure, the group would need additional funding from January 2021, when the current revolving credit facility ends,” and the amount raised could be as much as US$ 500 million, Brilliant wrote. “Our concern is that this may be financed at a significant cost.”

The company’s debt soared to US$ 8.5 billion from just US$ 467 million in 2017 as it pursued an international expansion.

Its announcement Monday came after Metro- Goldwyn- Mayer on Friday delayed the release of the new James Bond movie for the second time, pulling the plug on one of the few big films left on the 2020 calendar.

Cineworld “cannot underscore enough how difficult this decision was,” CEO Mooky Greidinger said in the statement. Cineworld will aim to reopen “when key markets have more concrete guidance on their reopening status and, in turn, studios are able to bring their pipeline of major releases back to the big screen.”

The company reopened cinemas in July “full of optimism,” but the delay of the Bond film was “a huge blow,” Greidinger said in an email to staff.

The internal message also said Cineworld is reviewing all roles to see if any can be supported with government funding.

“The new government scheme places a greater financial burden on employers, which cannot work for us when we have almost no income,” the email said, referring to U.K. fiscal support.