The world’s second largest cinema chain is in trouble

The owner of Regal Cinemas is having a hard time – its shares tumbled as much as 80% on Friday after reports that its parent company is preparing to file for bankruptcy.

British firm Cineworld Group spoke to lawyers at Kirkland & Ellis LLP to advise on bankruptcy proceedings in the US and UK, according to a report by the Wall Street Journal.

The stock has rebounded a bit but is still 60% below its early Friday trading price.

Earlier this week, Cineworld said in a press release that despite a “gradual recovery in demand” since the last quarter of last year, admissions were below expectations.

The company blamed a limited list of films for the lack of viewers, a situation it hopes will continue through the end of November.

The chain, which has more than 500 movie theaters across the United States, is exploring how to reduce its debt obligations, which it warned would “likely result in a very significant dilution of existing equity holdings” for shareholders.

Cineworld has struggled to stay afloat during the pandemic, when it was forced to close its theaters worldwide and suffered a loss of $2.7 billion in 2020, in 2021 the loss was $566 million.

It’s a similar story for other theaters. So far, this year’s U.S. box office receipts are nearly 30% lower than before the pandemic, according to Comscore, despite a major recovery, a media data company.

Cineworld declined to comment with the CNN Business about rumors that it is considering filing for bankruptcy. Kirkland & Ellis LLP did not immediately respond to a request for comment.

— Frank Pallotta contributed the report.