Cineworld (LON: CINE) share price has hit the end of the road after the suspension of trading on Friday. I’ve been repeatedly warning you about this in my previous analysis. No one in their right mind would’ve bought this stock after the firm applied for administration in the UK.
On Friday, Cineworld shares had a very weird price action as they tanked to 0.05p. However, the shares had recovered to 0.38p before the trading was suspended on London Stock Exchange. This marked the end of a wild ride for the shareholders, which started when the theatre operator filed for bankruptcy last year.
In its latest statement, Cineworld executives have said that the company has secured a $250m credit facility for its restructuring process. This would provide the company with the much-needed liquidity to implement its long-term strategies.
The restructuring plan will allow the Regal owner to release $4.53 billion of the group’s funded indebtedness. The company has also received a nod for the provision of $1.46 billion in new debt financing. As a part of the process, the existing Cineworld shares will be canceled on August 1.
Many people bought the Cineworld (LON: CINE) stock after its bankruptcy, anticipating a recovery. Little did they know that they were actually catching a falling knife. The Vue takeover rumors attracted a lot of retail investors. In hindsight, it seems that the institutions took that as an opportunity to exit.
During the restructuring, the existing company assets will be transferred to a new holding company. This entity will be solely controlled by the Cineworld lenders. This means that the current Cineworld shares would be worth nothing. The plan, which has already been approved by the court, will allow the firm to emerge from bankruptcy very soon.
Don’t let Cineworld share price action disappoint you, as there are still plenty of good setups in the market. I keep mentioning such opportunities on my Twitter, where you are welcome to follow me.
This post was last modified on Jul 31, 2023, 12:03 BST 12:03