Cineworld, the multiplex giant delisted from the London Stock Exchange last year, has announced plans to close 25% of its UK cinemas and negotiate rent cuts at 50 more as part of a radical restructuring plan. These proposals will be formally presented to creditors, including landlords, in the coming weeks.
Sources suggest that the restructuring will likely utilise a restructuring plan rather than a company voluntary arrangement (CVA). Cineworld responded to inquiries by stating, “We continue to review our options but we don’t comment on rumours and speculation.” This development follows reports from last month which highlighted initial discussions about a potential sale, transitioning into a formal restructuring process. AlixPartners is advising the company through this process.
Should a sufficient number of landlords reject the proposed terms, it is anticipated that other cinema operators will take over some of Cineworld’s sites. Cineworld currently operates over 100 sites in Britain, including the Picturehouse chain, and employs thousands of people, though specific numbers remain unconfirmed.
Under the leadership of the Greidinger family, Cineworld expanded significantly, acquiring Regal in the US in 2018 and the British company of the same name four years earlier. However, the company has faced a crisis due to its multibillion-dollar debt, leading to Chapter 11 bankruptcy protection in 2022 and its delisting from the London Stock Exchange last August as its share price plummeted.
A restructuring deal last year saw several billion dollars of debt exchanged for shares and new investments from a group of hedge funds and other investors. Since emerging from bankruptcy protection, Cineworld has appointed a new leadership team with Eduardo Acuna, former head of Cinepolis’s operations in the Americas, as CEO, and Eric Foss, a former Pepsi executive, as chairman. Cineworld also operates in Central and Eastern Europe, Israel, and the US.
The restructuring comes as the UK box office anticipates major summer releases, including “Despicable Me 4,” “A Quiet Place: Part One,” and “Alien: Romulus.”
As Cineworld ventures through its bold restructuring phase, the impact on its workforce and the broader cinema industry remains to be seen. This move marks a significant chapter in its storied history, aiming to navigate its way out of financial challenges and towards a more sustainable future.
