Cineworld shares soar as chain outlines coronavirus battle plan
Shares in Cineworld have soared more than 40 per cent this morning after the cinema chain outlined its plans to survive the coronavirus outbreak.
The group’s entire estate of 787 cinemas across 10 countries have been closed due to the coronavirus pandemic.
This morning the company announced its executive directors have postponed salary payments to conserve cash. Non-executives have also deferred payment of their fees.
Cineworld will scrap the payment of its 2019 fourth quarter dividend, as well as all upcoming payouts.
It said it is in discussions with landlords, film studios and major suppliers over its mitigation plans, and is “curtailing all currently unnecessary capital expenditure”.
Cineworld is also in discussions with its banks over its liquidity and credit facilities.
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“With very few exceptions, the good relationships we have built up over the years have been supportive and understanding of our efforts and, together with us, our industry partners look forward to the time when we shall again be able to open our doors and provide entertainment and pleasure to our customers,” the company said.
“News this morning that Cineworld was suspending its dividend was not a twist which can contend with the best in cinematic history like The Usual Suspects or Sixth Sense,” AJ Bell investment director Russ Mould said.
“Although its admission that government-mandated closure of cinemas has been ‘extremely challenging’ ranks up there with ‘Houston we have a problem’ in terms of understatement.
“Combined with the company’s heavy borrowings, built up to fund big acquisitions, this made the decision to defer the payout an inevitability.
“Cineworld’s battle for survival involves bosses forgoing pay, capital expenditure being frozen and urgent discussions with lenders, landlords, film studios and suppliers. Coming out the other side will not be easy.”