Cineworld share price has dropped by over 40% to a new record low today after the cinema chain announced that recent admission levels had come in below expectations, and that it may well have to take action to bolster its balance sheet and restructure its finances.

Management appears to be blaming a limited film slate that is expected to continue until November 2022, potentially impacting the company’s liquidity position in the near term. Unsurprisingly this hasn’t gone down well with investors over concerns that Cineworld may well have to raise extra capital by way of a shares issue, or other refinancing package.

Today’s announcement is more unexpected given the recent update from US based AMC Entertainment who said that the new Dr.Strange film and Top Gun: Maverick had seen ticket sales double, as US punters flocked back to the big screen.

AMC also said that July saw the highest monthly attendance in US theatres since December 2019 as confidence returned. This raises the rather awkward question as to what AMC are doing well that Cineworld clearly aren’t, as both can’t be right?

Either those two films were very popular, or they weren’t, and if AMC saw record July admissions, Cineworld probably needs to ask why it didn’t. That’s the question shareholders need to pose to management.

It was over a year ago that Cineworld management were facing shareholder revolts over a controversial pay and bonus scheme. Today’s announcement is likely to reignite that debate and pose legitimate questions as to the competence of the current management.

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