Cineworld shares soar on $750 million vote of confidence

Britain’s battered cinema industry got a shot in the arm today when Cineworld raised more than £550 million to get it through the pandemic — a show of faith from investors and banks in the biggest film outlet in the country.

With Boris Johnson set to announce screens in Tier 2 areas can reopen in December and more developments on a successful vaccine, the shares soared.

Last week Warner Bros took a bullish stance that Christmas can be saved, at least for the movie trade, deciding to release Wonder Woman 1984 next month, a huge relief to cinema chains starved of new films and blockbusters in particular.

Today Cineworld said it has secured $750 million (around £550 million) in liquidity. The company, which has been burning through cash at the rate of around £45 million per month, secured a new debt facility of $450 million and has agreed bank covenant waivers until June 2022. The shares jumped nearly 20%, up 9p at 55p. They were more than 80p in February.

The former FTSE 100 firm, headquartered in London, said that it expects the deal to keep it afloat as long as cinemas reopen by May 2021. That’s good news for the company’s 5,500 UK staff.

It also said today that it had agreed “certain material abatements and long-term rent deferrals with key landlords”, and some new lease agreements.

Chairman Alicja Kornasiewicz said “the board is confident this additional liquidity will preserve and maximise shareholder value over the long term”.

Cineworld also secured a £190 million loan in June from hedge funds including Centerbridge Partners, Arcmont Asset Management and Sand Grove Capital Management to help it through worldwide lockdowns.

The firm has expanded quickly under CEO Mooky Greidinger and now has 787 cinemas worldwide. But it has amassed £6 billion of debt in the process, which it has been trying to manage down with the help of City advisers.