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Cineworld crashes as 45,000 staff at risk from shuttering of UK and US cinema chains

Last updated: 08:23 05 Oct 2020 BST, First published: 07:23 05 Oct 2020 BST

Cineworld Group PLC -
The latest James Bond film, No Time to Die, has been delayed

Cineworld Group PLC (LON:CINE) shares crashed 47% to 21p after the chain said 45,000 staff will be affected as it shutters all its UK and US cinemas due to the postponement of major film releases.  

Its 536-strong Regal chain in the US and its 127 Cineworld and Picturehouse cinemas in the UK will close from this Thursday, October 8. 

Over the weekend, the release of the new James Bond film, No Time to Die, was pushed back to early April from its planned November launch, having already been delayed from April this year due to the coronavirus pandemic.

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

There have also been postponements for Marvel's Black Widow, the West Side Story and Wonder Woman remakes, while Disney's Mulan and Tom Hanks-starring Greyhound have both been switched from cinemas to online streaming instead.

Cineword said the big studios were reluctant to release their pipeline of potential blockbusters as major US movie theatre markets, notably New York, have “remained closed and without guidance on reopening timing”.

“In turn, without these new releases, Cineworld cannot provide customers in both the US and the UK - the company's primary markets - with the breadth of strong commercial films necessary for them to consider coming back to theatres against the backdrop of COVID-19,” the FTSE 250 company said. 

Mooky Greidinger, the company’s chief executive, said: "This is not a decision we made lightly, and we did everything in our power to support safe and sustainable reopenings in all of our markets – including meeting, and often exceeding, local health and safety guidelines in our theatres and working constructively with regulators and industry bodies to restore public confidence in our industry.”

The company raised US$360.8m in extra liquidity during the first half of the year but spent US$290.3mln just on financing costs during the period, with over US$8bn of debt.

The board said in its recent interim results that the group "should be able to operate within the level of its current facilities for at least 12 months", and while its debt covenants are forecast to be breached at December 30 this year and June 30 and December 31 next year, the directors expect waivers will be obtained. 

Shares in the company are down 90% from the 220p level at the start of the year.

"The spread of Covid-19 around the world has been a horror movie for the industry and the fresh wave of infections is the latest instalment in what’s been a devastating story for cinema chains," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

"New infection spikes amid warnings that the virus spreads more quickly indoors, is keeping customers away and with no big names to lure them through the doors this winter, Cineworld has reached this difficult decision in a bid to cut costs and preserve cash. With a vaccine still just out of reach, Cineworld won’t put a date on when venues will reopen next year and is now assessing various sources of additional liquidity, including raising cash from shareholders to try and stay afloat."

She noted that the new jobs support scheme will provide no lifeline for the 5,500 Cineworld UK employees who will lose their jobs this week, along with many others across the industry that are not deemed 'viable' by the government.

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