Cineworld (LON: CINE) share price is in hot waters once again as the theater chain just unveiled its debt restructuring plan. This will mean $2.3 bn in new funding to help the company come out of bankruptcy. The 2nd largest movie theatre chain in the world also discarded its plans to sell its UK, US, and Irish assets.
On Monday, shares of Cineworld Cinema plunged by more than 38% on the news. The stock dropped to 1.61p, which is the lowest level in its history. This also translates into a 73% price decline for Cineworld stock from its YTD high of 5.99p.
Since the filing of chapter 11 bankruptcy back in September 2022, Cineworld share price has been in a tailspin. Due to the bankruptcy proceedings and the takeover speculations, the stock has remained highly volatile. Just a month ago, it experienced a massive sell-off after it failed to acquire an all-cash deal for its UK & US assets.
However, after months of efforts, the company has finally decided not to sell its operations in its major markets of the US, UK, and Ireland. This is due to the recent debt restructuring agreement with its lenders, which provides the company with enough liquidity to come out of bankruptcy during the first half of 2023. The plan will involve $1.5 billion in new credit from the lenders as well as an equity backstop of $800 million.
According to Cineworld Cinemas, the company will keep accepting offers for its assets and operations in other jurisdictions. It has already received a few offers for its sites in Eastern Europe and Israel. Although the latest debt restructuring deal might result in the company’s emergence out of bankruptcy, the sell-off indicates that the shareholders were expecting something better.
At this point, it’s needless to say that the Cineworld share price forecast is very bearish as the price is trading at its lowest level in history. In the coming days, the price action is expected to remain volatile.
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