Cineworld pushes button on rights issue as sales swell
Blockbusters such as Beauty And The Beast, Star Wars: The Last Jedi and Dunkirk drew in the crowds.
Cineworld has reported rising annual sales and launched a £1.7 billion rights issue to help bankroll its £2.7 billion deal to buy US chain Regal.
The company said sales in 2017 rose 11.6% with blockbusters such as Beauty And The Beast, Star Wars: The Last Jedi and Dunkirk drawing in the crowds.
In the UK and Ireland, revenue rose 5.9% and Cineworld flagged a sharp rise in retail sales following the opening of five Starbucks.
“Admissions in both the UK & Ireland and the ROW increased compared with the prior year. Growth has been driven by the expansion of our estate, the improved results from the ongoing refurbishment programme and the continued roll-out of our premium formats,” the group said.
Cineworld is in the midst of a £2.7 billion deal to buy Regal in a move that will create the second-biggest cinema group in the world.
On Wednesday the cinema chain said it will issue new shares representing 80% of the enlarged group, with investors to receive four shares at 157p each for every one they hold at a 72% discount to Cineworld’s closing price of 563.5p on Tuesday.
The rights issue, which is fully underwritten, will raise £1.7 billion.
Cineworld shares were down 5% in morning trading at 535p.
The combined group will have more than 9,500 screens across 10 countries and will see Cineworld enter the lucrative US market.
Cineworld has agreed to pay $23 a share for Regal.
Regal directors and its biggest shareholder, the Anschutz Corporation, have given their recommendation for the acquisition, which is classed as a reverse takeover.
The deal will see the combination of Europe’s second-largest cinema group with the second-largest chain in the US.
It will give Cineworld access to the US market, which has the largest box office market in the world, worth more than $10 billion (£7.5 billion) a year.
The tie-up will also give the combined group greater might to compete with industry leader AMC Entertainment, which snapped up Odeon & UCI Cinemas Group in Europe in 2016.
The deal is expected to complete by the end of March.