Cineworld shares fell as much as 14% as the movie-theater operator set out plans to raise more money with its cinemas still shut.
which operates Regal theaters in the U.S., said it is planning to issue a $213 million convertible bond at a 7.5% interest rate. The cinema operator recorded a $1.3 billion pretax loss in 2020 and said its base case is that its cinemas will reopen in May. It is expecting a $200 million refund from the U.S. government, and it is seeking shareholder approval to suspend the borrowing limit in its articles of association.
“These are (hopefully) short-term concerns which have been exacerbated by the debt built up during Cineworld’s ambitious and ultimately ill-timed acquisition-led growth in recent years,” said Russ Mould, investment director at AJ Bell.
Cineworld shares were still up 46% in 2021, as it is an ideal vehicle to play reopening hopes.
shares rose as high as 136.62 pence as Morgan Stanley analysts led by Emmet Kelly put a 200 pence price target on the company and resumed coverage with an overweight rating. The broker argued that trends in the troublesome Italian market will improve, that the recovery in Germany is already gathering pace, and that operators including Vodafone are hiking prices in the U.K.
Vodafone also offers the deepest value in the telecom sector, and there is scope for consolidation in the Spanish market, the broker said.
The broader FTSE 100
traded 1.4% lower, weakening as the U.S. open
approached. Oil producers Royal Dutch Shell
were the biggest drag on the FTSE 100.