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IMAX Flexes as Cineworld Goes Bankrupt

On Wednesday, Cineworld filed for Chapter 11, IMAX doubled its stock repurchase program, and AMC's Adam Aron was, well, Adam Aron.

LONDON, ENGLAND - OCTOBER 05: People stand in front of a Cineworld IMAX cinema amid the coronavirus outbreak on October 5, 2020 in London, England. (Photo by Gao Tianyin/China News Service via Getty Images)

LONDON, ENGLAND – OCTOBER 05: People stand in front of a Cineworld IMAX cinema amid the coronavirus outbreak on October 5, 2020 in London, England.

China News Service via Getty Ima

While Cineworld — the parent company of Regal Cinemas and other movie-exhibition chains — was filing for bankruptcy, IMAX was flexing.

On Wednesday morning at 9:26 a.m. ET, IMAX announced it is increasing its existing stock-buyback program by another $200 million, doubling its former repurchase commitment. Since July 2017, IMAX has bought back approximately 10 million shares of its common stock for roughly $175 million. That basically means the giant-screen company still has $225 million to spend on its own stock through next June. Shares in IMAX rose yesterday on the repurchase news, and again today.

Hours before IMAX made it (metaphorically) rain, the world’s second-largest film exhibitor (with 9,139 screens across 747 sites, Cineworld is behind only AMC Entertainment in scope) began its Chapter 11 proceedings in Texas. So it was quite a different day for two of the major players in the industry.

For the record, we’re in no way suggesting IMAX’s announcement was intentionally timed to rejoice while Cineworld mourned, we’re merely pointing out the polar opposite Wednesdays. IMAX and Cineworld are invested in one another: there are roughly 135 IMAX screens in Cineworld cinemas, mostly Regals. Now, had IMAX’s news been an AMC announcement, we might feel differently about the coincidence. (At Wednesday’s Bank of America Media, Communications & Entertainment Conference, IMAX CFO Natasha Fernandes called the company’s relationship with Cineworld a “longstanding, great partnership.”)

AMC CEO Adam Aron took only the slightest of victory laps yesterday, tweeting: “Cineworld/Regal just filed for Chapter 11 bankruptcy protection for its theatres in the U.S.and U.K. Fortunately, AMC is in a very, very different situation — because retail investors embraced us and let us raise boatloads of cash. Thank you to retail! You really did save AMC.”

For him, that’s humble. AMC’s stock, which was saved amid the pandemic by a grassroots movement on Reddit, has grown since Cineworld took the Chapter 11 plunge.

Cineworld is filing for bankruptcy as a last-ditch effort to ditch debt loads and reorganize in such a way that it doesn’t go away completely. That plan, which will include a ” real estate optimisation strategy” (the British spelling, though they’re referring to U.S. locations) will be filed with the court “in due course,” according to the announcement.

That real-estate optimization (our grammar and spelling) will include an attempt to renegotiate lease terms, and almost certainly a significant shutdown of locations. Cineworld expects to emerge from its Chapter 11 status in the first quarter of 2o23. In the interim, operations will “continue in the ordinary course” — that includes shares trading on the London Stock Exchange, management and the board staying put, and the (digital) film reels turning. One of the main Chapter 11 benefits is the protection against lawsuits or creditor claims.

Cineworld lost $655.7 million (after taxes) in 2021; that followed a loss of $913.2 million in 2020. For a comparison, AMC’s losses were in the billions, which just goes to show how important those social-media “apes” (now APE owners!) were. The much smaller IMAX also lost money both years, just on a tinier scale.

“We have an incredible team across Cineworld laser focused on evolving our business to thrive during the comeback of the cinema industry,” Cineworld CEO Mooky Greidinger said in a statement accompanying the Chapter 11 announcement. “The pandemic was an incredibly difficult time for our business, with the enforced closure of cinemas and huge disruption to film schedules that has led us to this point.

“This latest process is part of our ongoing efforts to strengthen our financial position and is in pursuit of a de-leveraging that will create a more resilient capital structure and effective business,” he continued. “This will allow us to continue to execute our strategy to reimagine the most immersive cinema experiences for our guests through the latest and most cutting-edge screen formats and enhancements to our flagship theatres. Our goal remains to further accelerate our strategy so we can grow our position as the ‘Best Place to Watch a Movie.'”

Perhaps it’s time to make some friends on Reddit, Mooky.

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