Cineworld’s stock price jumped on Tuesday after it received approval to tap into a $1 billion fund after settling with its landlords.
A U.S. bankruptcy judge granted Cineworld Group, the parent company of Regal Cinemas, access to more than $1 billion in funds after the world’s second-largest cinema operator reached a settlement with its landlords and lenders about an hour ahead of a triggered interest accrual on the debt.
U.S. Bankruptcy Judge Marvin Isgur signed the order Monday afternoon that includes Cineworld borrowing an additional $150 million and making a $1 billion debt repayment.
The judge signed the order after landlords and junior creditors dropped their oppositions to the repayment of $1 billion debt once Cineworld, based outside London, agreed to pay at least $20 million in rent accrued after Sept. 30.
The rents are determined in part by movie theater attendance with at least $5 million earmarked for a four-month period, according to an attorney representing Cineworld, per CoStar News.
Cineworld operates in three segments: the US; the UK and Ireland (UK&I) and the rest of the world (ROW).
The U.S. segment includes three cinema chain brands; Regal, United Artists and Edwards Theatres.
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CINE.L Stock Jumps 195%
Cineworld Group stock (CINE.L) jumped 195% on Tuesday to $7 from $2.75.
The stock surged as high as $9 per share.
The theatre stock had more than 412 million in trading volume on Tuesday, almost 7 times its average trading volume of 61 million.
It’s this type of continuous volume that initially triggered AMC Entertainment stock to surge to its all-time high of $72 per share.
Retail investors are perplexed by the fact that a struggling theatre chain company like Cineworld has a bigger share price than industry leader AMC Entertainment.
Afterall, it is AMC Entertainment that has amassed millions of followers and investors, beat earnings every quarter since 2021, and is innovating in NFTs, crypto, and a branded popcorn business.
But money speaks volumes, literally.
Volume is what caused AMC and GameStop to spike last year, and it’s what is going to cause the movie industry leader to spike again.
That is if retail investors remember to realize this.
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Sources: CoStar
