Profit warnings are often said to come in threes but for three big-name companies to all warn on the same day that they could soon go bust, it shows the shocking fallout from the coronavirus outbreak.
Cineworld Group plc (LON:CINE), Finablr PLC (LON:FIN) and Intu Properties PLC (LON:INTU) all put out worrying statements raising doubts about their own survival Thursday, contributing to the extraordinary losses seen across markets.
Cineworld said a worst case scenario for the coronavirus outbreak, with moviegoers in the UK and US staying at home for three months, this would lead to “material uncertainty” and “may cast significant doubt about the group’s ability to continue as a going concern”.
Management said that while the coronavirus had currently only had a “minimal impact” on the business, there could be “no certainty” of how the firm’s performance would be affected if the virus continued to spread.
Shares in the cinema group were down almost 50% on Thursday morning, but by the afternoon were down 23% at 67.8p.
Over at fellow FTSE 250 constituent Finablr, although the Travelex owner will be leaving the mid-cap index later this month, there was talk of a cash crunch.
Demand for Travelex’s foreign exchange services has been hit hard by travel restrictions imposed to limit the spread of coronavirus, which have also restricting the movement of physical currency notes and coins that the forex company needs.
A “liquidity squeeze” is affecting Finablr at both group and operational business level, with Travelex’s bonds having recently been hit by a credit downgrade and investor perceptions tainted by the associations with NMC Health (LON:NMC), as both companies were founded by BR Shetty.
Finablr’s shares were down 77% to 5.1p on the day, 97% since December when a hedge fund first raised doubts about NMC’s finances.
At Intu, investors have been biting their fingernails for much longer, as the shopping centre owner has suffered from the structural changes to the retail sector — so it was the only one what was not really about coronavirus, though there will be an effect on the retail sector.
In Thursday’s results, the owner of the Trafford Centre in Manchester and Eldon Square in Newcastle revealed that, with debt of £4.5bn and the value of its properties slashed 22% to £6.6bn, the failure to get away a rights issue this month it putting the business in mortal danger.
Because of the risk of further valuation declines and the ability to refinance its debt pile, the company said: “A material uncertainty exists that may cast significant doubt on the group and company’s ability to continue as a going concern.”
Shares in Intu were down 23% on the day to 4.38p, a long way from the near-300p levels when it was a FTSE 100 company three years ago.
Bosses remain optimistic
Intu boss Matthew Roberts, who took over last April, reckons he can still raise cash by selling some assets and with “alternative capital structures” and hopes that lenders give a helping hand where appropriate.
While Finablr’s squeeze looks a tough one as travel restrictions could be in place for some weeks, directors stressed that the group’s “management, operations and finances… are independent and separate from” NMC, though the association has “exacerbated current levels of stress on the company’s cashflow position”.
They hope an independent investigation will help dispel some of this stress.
As for Cineworld, chief executive Mooky Greidinger said: “Should conditions relating to [coronavirus] continue or worsen, we have measures at our disposal to reduce the impact on our business including, but not limited to, capex postponement, cost reduction, in order to maintain cash liquidity”.