It's almost Mission Impossible for Cineworld Group PLC (LSE:CINE) as analysts at Peel Hunt slashed their target price over talks of deleveraging.
Peel Hunt cut its target to 20p from 32p, while reiterating its Hold rating.
Cineworld said in a statement today that it is considering options to increase liquidity through a “comprehensive deleveraging transaction.”
The broker noted that it is unclear whether Cineworld would be able to raise fresh debt or issue fresh equity, but either outcome will dilute the value of the existing equity.
Shares in Cineworld nosedive 57% to 8.6p after the operator cautioned fewer moviegoers will hit liquidity.
Recent admissions had been lower than expected, with the group blaming a lack of big-budget movies to draw in customers.
“These lower levels of admissions are due to a limited film slate that is anticipated to continue until November 2022 and are expected to negatively impact trading and the group's liquidity position in the near term,” a statement said.
The movie industry has been hit hard by disruptions caused by Covid-19, meaning fewer film releases this summer.
In addition, a number of films have been released direct to streaming – again hurting the cinema operator’s sales.
This is in stark contrast to earlier in the year, when the group said it was continuing on the road to recovery thanks to the re-opening of cinemas and set of box office films, including ‘Spider-Man: No Way Home’, ‘No Time to Die’ and ‘Dune.’