Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Cineworld is considering shutting down a quarter of its cinemas in the UK as it draws up plans for a sweeping restructuring deal to slash costs at the chain, which crashed out of the London Stock Exchange last year.
The cinema operator, which runs more than 100 cinemas in the UK, is set to close as many as 25 sites and renegotiate with landlords to slash the rent bill on about another 50 venues, as part of a proposal to be put to creditors in the coming weeks, according to two people familiar with the situation.
They added that the mechanism adopted by Cineworld was expected to be a restructuring plan, a new process introduced in 2020 that requires an approval by the court, rather than a company voluntary arrangement. The plan was first reported by Sky News.
AlixPartners is acting as an adviser for the process.
Cineworld said: “We continue to review our options.” The company declined to comment further.
The shake-up comes as Cineworld, which owned 750 cinemas across 10 different countries as of December 2021, still remains under financial stress even after it was delisted from the LSE last year after its share price collapsed. It was then taken over by its lenders.
Through a series of debt-fuelled acquisitions, first of UK-based Cineworld in 2014 and then of US-based Regal Cinemas in 2018, the Greidinger family transformed their Israeli cinema group into a global giant.
But when the pandemic struck, shuttering the industry and leading to Cineworld abandoning a $2.1bn takeover of Canadian rival Cineplex, the cinema chain’s $8.8bn in debt and lease liability quickly became an obstacle.
Cineworld filed for Chapter 11 bankruptcy protection in the US in 2022, and investors exchanged multibillion-pounds’ worth of debt for equity in the business after it emerged from the proceedings.
The cinema industry has meanwhile been marked by a lack of supply. The first joint industry strike in 60 years by Hollywood actors and screenwriters last summer brought filming to a near standstill during much of 2023.
Cineworld’s competitor Vue warned in its annual report in June of the long-lasting impact of the strikes on the industry.
“Even though film production resumed in early 2024, the impact of the strikes will be at their most material in 2024 and into 2025 due to a lower number of completed films being available for theatrical release,” it said.
Additional reporting by Daniel Thomas in London
