The Cineworld Group plc (LON: CINE) share price rose 13.9% as investors look forward to the movie theatre chain filing for administration in the UK, the last major obstacle standing between it and emerging from Chapter 11 bankruptcy later this month.
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A lot is going on with Cineworld, including the search for a new CEO, which means that long-serving CEO Mooky Greidinger is out. News reports indicate that the company’s CEO and team will receive a US$35 million golden handshake as a goodbye.
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Cineworld’s new owners and lenders have already selected former Pepsi executive Eric Foss as the company’s new chairman. Sky News reported that the new owners are considering hiring Eduardo Acuna, who runs the Americas operations of Mexico's Cinepolis, as the next CEO.Â
Eduardo has experience running a growing network of cinemas and should have no issues settling into the CEO role at Cineworld, but nothing is confirmed yet. Meanwhile, retail investors boosted Cineworld’s share price despite the looming delisting of the shares.
Cineworld has repeatedly warned that existing investors will be wiped out and that there is nothing much the company can do about it since its lenders will be the new owners of the Holdco, which will be the holding company for Cineworld’s subsidiaries.
The world’s second-largest movie theatre chain has over 28,000 employees working across 751 sites globally, with 128 locations in the UK and Ireland. The company’s operations have remained intact throughout the bankruptcy process, and nothing is expected to change post-bankruptcy.
The deas signed by Cineworld and its lenders will see the company release debts worth $4.5 billion and enter into a rights issue worth $800 million. The company will also have access to a debt facility worth $1.46 billion if needed.
The movie theatre industry faces a significant headwind due to the growing popularity of movie streaming services. Furthermore, some movie studios are releasing their movies directly to streaming sites, denying movie theatres the exclusive monopoly they had on most movie releases.
Cineworld’s prospects are priming, but I wouldn’t buy the shares for the above reasons.Â
*This is not investment advice.
Cineworld share price.
The Cineworld share price today rallied 13.89% to trade at 0.41p, from Friday’s closing price of 0.36p.
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