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Latest film delays add to Cineworld’s woes with market worried about its future

Analysts fear for the future of the cinema operator considering its debt pile and dire trading ahead

Cineworld Group PLC - Latest film delays add to Cineworld’s woes with market worried about its future

Cineworld Group PLC (LON:CINE) was in for more bad news on Thursday after Disney moved the release of Black Widow from November to May and West Side Story by a year to December 2021.

The decision, announced after the company had signed off its trading update, was reportedly due to the disappointment of Tenet in the US.

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

Christopher Nolan’s movie, which allegedly cost US$200mln to produce, made around US$251mln in box offices worldwide in the month following its release. Some attribute the lukewarm reception to scarce enthusiasm over a confusing plotline.

This year there are still No Time to Die and Wonder Woman 1984 on the schedule but the market fears they may be pulled back to 2021 too.

“Ultimately there isn’t anything out now or coming very soon that will really make people want to take the risk of sitting in a room with a load of strangers for two hours,” noted AJ Bell investment director Russ Mould.

“If the new James Bond film No Time To Die gets pulled from its November release date then the cinema industry is really in trouble.”

Cineworld, which has reopened only 567 out of 778 sites, is trying its best to attract more customers, with discounts on memberships and drinks promotions while boasting high cleaning standards.

However, in the key US market big hubs such as Los Angeles and New York remain shuttered.

Peel Hunt noted that there is a little in today’s current trading statement beyond management being “encouraged” by recent performance driven by Tenet, while the FTSE 250-listed firm acknowledged its risks over the coming months.

The underlying message seems that Cineworld is running out of money, having admitted it may need to raise additional liquidity if further restrictions are imposed by governments, forcing more closures or pushing back further movie releases.

Following an eye-watering US$1.6bn loss before tax in the six months to June with revenue down 67% to US$712mln, the cinema operator reckons it can last for at least another year.

At period-end it had term loans totalling US$3.6bn 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.

But analysts remain cautious on potential new cash calls, considering the net debt totalled US$8.2bn in June.

“Shareholders have been supportive to date but at some point, they might have to question whether they’re simply throwing money away,” Mould continued.

“Cineworld is walking a very long tightrope with the winds picking up that could knock it and the cinema industry down.”

Shares, which slumped 80% in the year to date, were trading 11% lower at 43.27p on Thursday afternoon.

Quick facts: Cineworld Group PLC

Price: 24.32 GBX

AIM:CINE
Market: AIM
Market Cap: £333.86 m
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