The Cineworld Group plc (LON: CINE) share price plunged 12.1% after clarifying that it had not held any talks with AMC Entertainment, contrary to recent media reports. As we had reported earlier, AMC had indicated in a regulatory filing that it had abandoned takeover talks with Cineworld.
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The report indicated that AMC had been negotiating with Cineworld lenders about acquiring some cinema assets. However, the two groups did not reach a definitive agreement. However, today’s update clarified that the movie theatre operator had not participated in any talks with AMC Entertainment regarding the potential sale of some of its assets in the past.
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Cineworld noted that it was still developing a Plan to restructure its capital structure while pursuing a transaction that would maximise the value of its assets through a marketing process focused on the group’s assets as a whole.
The company told investors that the marketing process is scheduled to begin in January 2022 and that the sale of its assets would not include the sale of Cineworld itself. Hence, the transaction would not be subject to the rules stipulated in the Takeover Code.
Cineworld further warned investors that any restructuring or sale transaction agreed upon with its creditors would significantly dilute existing shareholders. There are no guarantees that current equity holders will recover their stake in the company.
The company’s shares plunged lower following the announcement and clarification regarding potential talks with AMC Entertainment. As I have previously mentioned, Cineworld’s management is keen to emerge from the bankruptcy process intact despite the dilution of existing shareholders.
While the ideal situation for the company’s creditors would be to find a buyer for Cineworld’s assets, the likelihood of the same is in doubt. However, a buyer could still emerge at any time.
*This is not investment advice.
Cineworld share price.
The Cineworld share price plunged by 12.14% to trade at 3.20p, falling from Friday’s closing price of 3.64p.
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