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Cineworld Shares Muted Despite Agreeing To Pay a Key Supplier

Simon Mugo trader
Updated 19 Dec 2022

The Cineworld Group plc (LON: CINE) share price had a muted reaction to the latest Bankruptcy court hearing, where it agreed to pay the debt owed to its confections supplier to prevent the vendor from cutting off its supplies.

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YOUR CAPITAL IS AT RISK. 81% OF RETAIL CFD ACCOUNTS LOSE MONEY.


In the hearing held on 15 December 2022, the company agreed to pay the £1 million it owed its confections’ supplier before filing the bankruptcy case to ensure that the firm continues receiving confections from the named supplier.

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YOUR CAPITAL IS AT RISK. 68% OF RETAIL CFD ACCOUNTS LOSE MONEY

Cineworld needed the bankruptcy court’s approval of the payment, given that the chapter 11 bankruptcy process is court-supervised, and had filed the motion as an emergency motion given the crucial role that confections sales play in its theatre ticket sales. 

In addition, previous financial reports have indicated that Cinema operators make almost the same amount of money from selling confections as they do from selling movie tickets. Therefore, the lack of confections would have created significant disruptions for Cineworld’s operations. 

Moviegoers who buy confections to enjoy as they watch their favourite movies would have been disappointed to find their favourite confections unavailable at their local cinema or movie theatre. 

Looking at the company’s fundamentals, we can see that its share price has not benefitted significantly from the recent blockbuster movie releases such as Avatar The Way of Water and Black Panther Wakanda Forever. 

Cineworld shares are stuck trading in a restricted sideways range that started after the firm filed for chapter 11 bankruptcy protection in September. However, CINE stock had already crashed when rumours of the bankruptcy filing emerged in mid-August. 

Investors should look forward to January, when the deadline for filing claims against Cineworld will expire, and early March, which is the governmental bar date. Meanwhile, we cannot rule out the filing of other motions, and the company and its creditors work out a deal. 

As a value investor, I wouldn’t touch Cineworld stock with a ten-foot pole, given its massive debt pile that teeters around $9 billion, including lease liabilities. 

*This is not investment advice. 

Cineworld share price.

The Cineworld share price continues to trade sideways as the bankruptcy case proceeds.


YOUR CAPITAL IS AT RISK. 81% OF RETAIL CFD ACCOUNTS LOSE MONEY.


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