Final cut: Israeli-owned movie theater chain Cineworld preparing to file for bankruptcy
Final cut: Israeli-owned movie theater chain Cineworld preparing to file for bankruptcy
The second largest cinema chain in the world is crashing, with its stock collapsing by 82% in three London trading days. The chain, which failed to recover from the pandemic at the rate it expected, has accumulated a debt of $9 billion
Cineworld, the chain of cinemas owned by Israel’s Greidinger family, is preparing to file for bankruptcy.
The chain, which operates 751 movie theaters in ten countries and is controlled by the brothers Mooky and Israel Greidinger from Haifa, announced on Tuesday that it is conducting discussions with creditors regarding options to improve its balance sheet and reduce its debt - which will result in a significant dilution of shareholders.
The company's activities are clouded by a huge debt of $9 billion, which Cineworld took on in recent years to expand its activities through acquisitions. As a result, the shares of the second largest cinema chain in the world have crashed on the London Stock Exchange, falling by a total of 82% over three days.
The value of the stock fell to a price of $2 per share from $20, giving the company a valuation of $55 million.
The chain was not able to recover from the pandemic period at the pace it expected, and now with the accumulated debt its executives decided to begin bankruptcy proceedings, and even turned to a law firm to get advice on the process. The chain is expected to file for bankruptcy in both the United Kingdom and the United States, according to The Wall Street Journal.
At the end of June, Mooky Greidinger was convicted as part of a plea deal after admitting that the film distribution company he owns, controlled by the international cinema giant Cineworld, violated the terms of a merger by not transferring eight films to a competitor, Lev.
During the hearing, he commented on Cineworld's dismal situation: "We were an unprecedented success story, I don't think there are many Israeli companies that have become the second largest cinema chain in the world. But two and a half years ago, our life’s work collapsed. Because of the pandemic, for the past two and a half years, I have been fighting every day to save what we have built. I hope we will succeed, but it's not certain. The company's debt increased because of the pandemic, our share price dropped by 93%, and we hope for the best for the group's future."
