ADVERTISEMENT

Cinemark Is Exploring Liquidity Options as Theaters Remain Shut

Cinemark Is Exploring Liquidity Options as Theaters Remain Shut

(Bloomberg) -- Cinemark Holdings Inc. is exploring financing options including accessing private sources of capital to shore up its liquidity, according to people with knowledge of the matter, as its 345 movie theaters across the U.S. are shuttered due to the coronavirus pandemic.

The company this week began contacting prospective advisers as it seeks to manage its debt load, said the people, who asked not to be identified because the matter is private. A Cinemark representative declined to comment.

The Plano, Texas-based company’s shares have tumbled 75% this year, leaving it with a market value of less than $1 billion. Cinemark’s debt load stood at $3.4 billion as of Dec. 31, including operating leases. Earlier this week, the company said it had implemented temporary wage reductions for all U.S. employees while its theaters remain closed indefinitely.

“The dramatic global impact of the coronavirus has created a turbulent environment that is changing daily and dramatically affecting everyone,” Cinemark Chief Executive Officer Mark Zoradi said in statement Monday. “We are not generating any revenue while theaters are closed, yet still must meet financial and contractual obligations.”

Zoradi and the company’s board of directors are forgoing their salaries during this time to support the company’s cash-preservation efforts. Cinemark also is exploring how to tap federal relief funds to boost liquidity, according to a person with knowledge of the discussions.

A spokesman for a lobbying group for U.S. theater owners said last week that the $2.2 trillion bailout package Congress passed last week includes loan guarantees and emergency grants that cinemas can access.

Moody’s on Tuesday revised its outlook for Cinemark to negative from stable following its widespread theater closures.

Many U.S. companies, including Walt Disney Co. and AMC Entertainment Holdings Inc., have sought to shore up their balance sheets amid the uncertainty caused by the pandemic.

©2020 Bloomberg L.P.