The owner of the Cineworld chain and the Duke of York’s has signalled that it may file for bankruptcy within weeks.
Shares in Cineworld Group PLC slumped in trading on the London Stock Exchange from almost 10p to below 2p at one point before recovering to close at 4p.
This left the business, which is still trading, with a stock market valuation of just under £40 million.
The shares were priced at more than 82p last September but the slow recovery in audience numbers since the coronavirus pandemic restrictions were lifted last year has dented revenues and profits.
At the end of December, the company’s financial year end, Cineworld had debts totalling £4 billion, having made a pre-tax loss of £600 million, down from a loss of more than £2.5 billion in 2020.
Although revenues were about £1.5 billion, up from about £700 million in 2020, they were still well down on the £3.7 billion in 2019.
Cineworld also prepared to file for bankruptcy in the autumn of 2020 but the cinema chain was kept afloat with a rescue package worth about £400 million.
The chain has suffered from the success of streaming services such as Netflix and Amazon Prime which were given a boost during the coronavirus lockdowns.
Fewer people than expected have gone back to the cinema, though, and low levels of revenue and high levels of debt repayment are hampering the company’s finances.
A few hours ago, the Wall Street Journal broke the news about Cineworld preparing for a possible bankruptcy.
The story triggered the collapse in the share price in London and prompted union boss Philippa Childs, head of entertainment and media union BECTU, to describe it as “very worrying news”.
Cineworld employs about 28,000 workers globally, with operations in 10 countries and about 750 sites.
In Britain, the company employs about 5,500 people – mostly on zero hours contracts – at 127 sites, including Brighton Marina.
Cineworld owns the Picturehouse chain which includes the Duke of York’s, Britain’s oldest working cinema, at Preston Circus, as well as Duke’s at Komedia, in Gardner Street.
BECTU boss Philippa Childs said: “This is very worrying news, not least for the UK’s Cineworld and Picturehouse workforce who have already been through a tumultuous time during the pandemic.
“The UK’s cinema industry suffered an incredible blow due to covid-19 and this latest news will be very unsettling for cinema workers.
It was folly for the Duke of York’s to sell out to Cineworld. The standard and variety plunged. As I recall, a whole week was given over to Fifty Shades of Grey.
Spirit of overs. Once a customer is lost, that is that.
I now watch films at home.
But could there be some hope? The site is a Council freehold.
This is a great shame. Dukes, D@Komedia and even the Marina are all nicer than the Odeon.
And I was hoping to see “The Lady of Heaven ” in a public cinema there