Cineworld, the world’s second-largest cinema chain operator behind AMC Entertainment, has announced that it will no longer sell its businesses in the US, UK, and Ireland after failing to find a buyer. The company had placed the majority of its business under US Chapter 11 bankruptcy protection in September, after taking on heavy debt to acquire US chain Regal. The covid-19 pandemic then pushed the company into distress after lockdowns delayed the release and production of blockbuster movies and shuttered cinemas for months. In Ireland, Cineworld operates the country’s largest cinema on Parnell Street, Dublin.
The cinema chain operator has proposed a new debt restructuring plan, which aims to reduce debt by about $4.53bn (€4.16bn), mainly through creditors getting equity in a reorganised group. A proposed capital raise will comprise of new debt in a so-called exit facility worth $1.46bn (€1.34bn), and the issuance of new stock to pre-bankruptcy lenders will yield gross proceeds of $800m (€735m). Cineworld expects to emerge from bankruptcy in the first half of the year. The capital raise proceeds will go to pay debtor claims, fees, and other expenses, and working capital for the company’s next steps, according to the filing.
CEO Mooky Greidinger said in a statement, “This agreement with our lenders represents a ‘vote-of-confidence’ in our business and significantly advances Cineworld towards achieving its long-term strategy in a changing entertainment environment.” The company also announced that it would continue to consider proposals for the sale of its ‘Rest of World’ business, which accounted for about 13% of its revenue in 2021 and comprises operations in Poland, the Czech Republic, Slovakia, Hungary, Bulgaria, Romania, and Israel.
The pandemic has caused a significant impact on the entertainment industry, particularly the cinema sector. With the closure of cinemas and the halt of film production, many cinema chains have been struggling to stay afloat. Cineworld’s decision to restructure its debt and emerge from bankruptcy is a sign of hope for the industry, and the company’s CEO’s statement is a positive indication of the company’s future. However, the cinema chain will still have to face the challenges brought about by the pandemic and the changing entertainment landscape.
The decision to scrap plans to sell its US, UK, and Ireland businesses may come as a surprise to some, but it may be a strategic move for the company. With the uncertainty brought about by the pandemic, finding a buyer for the businesses may have been difficult, and the company may have decided that restructuring its debt and keeping the businesses may be the best option.
Overall, Cineworld’s decision to restructure its debt and emerge from bankruptcy is a positive step for the company and the cinema industry. The pandemic has caused significant challenges for the entertainment sector, but with the reopening of cinemas and the resumption of film production, there is hope for the industry’s recovery. Cineworld’s CEO’s statement is a vote of confidence in the company’s future, and it remains to be seen how the company will navigate the changing entertainment landscape.