In a worst-case scenario, the spread of coronavirus could cause Cineworld to be unable to pay its debts and call into question its ability to continue trading, it has said.
The world’s second-largest cinema chain has seen its share price fall more than 60 per cent this year fears that coronavirus, which globally has killed more than 4,600 people and infected over 126,000, would force cinemas to close.
Cineworld operates a cinema on Parnell Street in Dublin.
On Thursday it said that, while it had yet to experience any material financial hit from the spread of Covid-19, in an extreme situation of widespread closures it could lose up to three months revenue, leaving it at risk of breaching its financial covenants.
That in turn would “indicate the existence of a material uncertainty which may cast significant doubt about the group’s ability to continue as a going concern”, it said.
Mooky Greidinger, Cineworld chief executive, said: "Should conditions relating to Covid-19 continue or worsen, we have measures at our disposal to reduce the impact on our business including, but not limited to, capex postponement, cost reduction, in order to maintain cash liquidity, however we have highlighted the potential impact this could have on the group within our going concern statement."
Attendance
Worries over the impact of the virus on box office attendance – coupled with the group’s high debt levels – have driven short sellers to push bets against Cineworld to a record high this month.
It was put under further pressure after the new James Bond movie was postponed to November largely due to the closure of cinemas in Asian markets.
The announcement came as the group announced results for 2019. It brought in revenues of $4.7 billion (€4.2 billion) during the year, down 6 per cent from the previous year. Pretax profit was $212 million, down 40 per cent. – Copyright The Financial Times Limited 2020
