Cineworld shares slip after theater chain denies talks with rival AMC

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Cineworld shares slip after theater chain denies talks with rival AMC
Credit: © Reuters.

By Scott Kanowsky -- Bankrupt movie theater operator Cineworld Group (LON: CINE ) has announced that it has not been in discussions with rival AMC Entertainment Holdings Inc (NYSE: AMC ) over a possible sale of some its assets, denying earlier media reports.

In a statement, the Regal owner said that "neither it nor its advisers" have held talks with AMC. The U.K.-based company added that it is focused on pursuing a buyer that is interested in snapping up the entire group instead of just some of its smaller units.

"Cineworld has not initiated and does not intend to initiate a separate marketing process for the sale of any of its assets on an individual basis," it said.

London-listed shares in Cineworld dipped by as much as 14% on Tuesday.

Cineworld reiterated a prior warning that its stakeholders will likely see a significant dilution in their equity holdings and may even be unable to fully recover the value of their shares.

In September, Cineworld filed for chapter 11 bankruptcy in the U.S., giving it time to sort out a broad restructuring of the firm's finances. Debts at the world's second-biggest cinema chain have ballooned following the shuttering of its locations during the pandemic and a weak recovery from the crisis, as well as a failed takeover bid of Canadian peer Cineplex.

AMC said in December that it held negotiations with some of Cineworld's creditors about a "potential strategic acquisition" of some of its theaters in the U.S. and Europe. AMC would have contributed equity in the form of preferred stock, while assuming some of Cineworld's debts. However, AMC claimed these talks had come to a halt.

Shares in AMC rose in U.S. premarket dealmaking. The Odeon owner - one of the hottest of the so-called "meme stocks" of 2021 - is now trading back where it was before easy monetary policy and an army of gung-ho retail investors drove its epic short squeeze. But its underlying problems have failed to go away: it is still making heavy losses despite the reopening of almost all of its theaters as the pandemic has faded.

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