Cineworld secures $750m funding lifeline amid Covid-19 closures
Cineworld has secured $750m (£561m) in additional cash to help bolster its balance sheet amid coronavirus closures.
The FTSE 100 group, which is the world’s second largest cinema chain, said it has agreed a new $450m debt facility and a waiver on all banks covenants on its debt until June 2022.
Other measures include an extension on its $111m revolving credit facility until 2024 and an acceleration on its tax year closure to bring forward an expected tax rebate of over $200m to early next year.
Cineworld said the funding package will ensure its survival as long as cinemas reopen by May 2021. If reopenings are delayed further, the firm may need further financial support to stay afloat.
The announcement of the cash injection, combined with positive reports about Astrazeneca’s Covid-19 vaccine, drove up shares by more than 22 per cent.
“The measures we are announcing today deliver over $750m of extra liquidity to support our business,” said chief executive Mooky Greidinger.
“Over the long term, the operational improvements we have put in place since the start of the pandemic will further enhance Cineworld’s profitability and resilience.”
Cineworld was last month forced to shutter all 660 of its venues in the UK and US, putting 45,000 jobs at risk.
It is expected that cinemas in some parts of the UK will be allowed to reopen when the national lockdown comes to an end on 2 December.
However, cinema operators are still reeling from a delay in film releases due to the pandemic, meaning there is a shortage of blockbusters to attract customers.
The release of the new James Bond film has already been pushed back twice, sparking frustration across the industry.
Shares in Cineworld have plunged almost 75 per cent since the start of the year, though it has begun to claw back some of those losses amid renewed optimism about Covid-19 vaccines.
Exclusive analysis for City A.M. by exchange-traded fund provider Granite Shares showed the Cineworld is the UK’s most shorted stock, as investors bet against the cinema giant’s fortunes.