S&P downgrades Cineworld's long-term debt on expected near-term liquidity pressures
Cineworld Group
0.38p
08:19 28/07/23
Analysts at Standard&Poor's downgraded their view on Cineworld's long-term debt, warning of the risk significantly lower than expected cinema admissions over coming months could lead to a rapid worsening of its liquidity position.
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"Cineworld Group PLC's liquidity position could rapidly deteriorate over the next few months, as cinema admissions remain significantly below our previous expectations, increasing the probability of a default," S&P said.
The ratings agency also forecast that operating conditions for global out-of-home entertainment would remain "tough" through the fourth quarter of 2020 and in the following year because of the pandemic.
Hence S&P downgraded its rating on the company's long-term debt from CCC+ to CCC- with a negative outlook attached.
"The negative outlook reflects the uncertainty on whether Cineworld would be able to stabilize its cash flow and liquidity and obtain additional financing and a covenant waiver.
"It also reflects the potential risk of a distressed debt exchange."