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Cineworld Shares Edged 4.1% Lower Despite an Agreement With Regal Investors

Simon Mugo trader
Updated 18 Feb 2022

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Key points:

  • Cineworld shares fell 4.1% despite an agreement with Regal shareholders.
  • The cinema operator has bigger problems than the $79.3 million payment.
  • I wouldn’t buy Cineworld shares since there are better companies out there.

The Cineworld Group plc (LON: CINE) share price edged 4.1% lower despite the cinema operator announcing that it had agreed with the dissenting former Regal Cinemas shareholders to stagger the last payments.

The company said that its discussions with the disgruntled shareholders resulted in a 3-month extension to the 31 March 2022 deadline, with the two parties setting a new deadline for 30 June 2022.

Also, Read Best Shares to Buy Now.

Cineworld said that the shareholders had agreed to be paid in instalments the remaining $79.3 million after Cineworld agreed to pay them $170 million in September 2021. However, investors did not think the news had a lot of significance.

The cinema operator has a host of more significant problems, including its $8.4 billion debt pile, which has left many wondering exactly how the company shall repay the massive deal despite the reopening of its cinemas.

The company is also appealing the C$1.23 billion ($969.7 million) damages award to Canada’s Cineplex Cinemas after pulling out of the deal to acquire the Canadian cinema chain when the coronavirus pandemic started early 2020.

Overall, Cineworld shares will remain under pressure until its appeal against the Cineplex award is heard and determined. At that point, investors will know if the company’s debt load will be increasing by hundreds of millions or if it will be free to keep operating.

Meanwhile, investors interested in acquiring the company’s shares may find the current prices attractive after the shares fell 52% in the past 12 months. Luckily for investors, Cineworld shares have risen 21.2% in 2022 and could be headed higher.

However, I wouldn’t buy Cineworld shares now or in future given its massive debt pile and uncertain future due to the threat posed by the coronavirus pandemic and the likely imposition of new restrictions in future.

I believe there are better companies out there that deserve my money. Still, that is just my perspective. Your investment goals may differ from mine, or you might have more faith in the company than I do; this is not investment advice.

Cineworld share price edged 4.09% lower to trade at 38.24p, falling from Thursday’s closing price of 39.87p.

*This is not investment advice. Always do your due diligence before making investment decisions.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading