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Cineworld braces for new restrictions after posting US$1.6bn interim loss

The cinema operator was encouraged by recent performance driven by the film Tenet

Cineworld Group PLC - Cineworld pins hopes on winter releases but braces for new restrictions

Cineworld Group PLC (LON:CINE) warned it may need to raise additional liquidity if further restrictions are imposed by governments, forcing the closure of venues or pushing back movie releases.

In the six months to June 30, 2020, it posted an eye-watering US$1.6bn loss before tax from last year's US$139mln profit, while revenue slumped by 67% to US$712mln.

READ: Cineworld higher as CEO highlights sold-out movie screenings following reopening

The group had term loans totalling US$3.6bn as of June 30, 2020, and a revolving credit facility of US$573.3mln, while recently it added a new US$250mln secured loan from private institutional investors and a loan from the Israeli government for US$6.9mln.

While the current loan facilities are forecast to sustain the business for at least another year, covenants are forecast to be breached in December 2020 and in June and December 2021, but Cineworld reckons it can obtain waivers.

The firm has reopened 561 of its venues but in the US, its largest market, California remains partially closed and New York is yet to reopen.

The FTSE 250-listed firm, encouraged by the recent performance of Tenet, is pinning its hopes on the release of films such as Wonder Woman 1984, Black Widow, the latest James Bond No Time To Die, West Side Story and Pixar’s Soul among others.

However, it was announced on Wednesday that Black Widow was moved to May 2021, pushing West Side Story to open in winter 2021.

"Today’s first half year numbers serve to highlight the scale of the mountain that needs to be scaled by the sector as a whole, and certainly back up the decision to pull out of the highly questionable US$2.1bn deal to buy Cineplex, which now looks set to go through the courts," said Michael Hewson, chief market analyst at CMC Markets.

"While the company has taken steps to shore up its balance sheet it still remains highly questionable as to when the business will be able to generate enough revenues to make its theatres profitable under current social distancing guidelines."

Shares tumbled 17% to 40.37p on Thursday morning.

--Adds analyst comment, shares--

--Adds film delays--

Quick facts: Cineworld Group PLC

Price: 32.4 GBX

AIM:CINE
Market: AIM
Market Cap: £444.79 m
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