Cineworld Plans Drastic Restructuring Measures

The British cinema operator Cineworld is considering closing a quarter of its cinemas in the UK as part of a comprehensive restructuring plan to reduce costs. The company, which operates more than 100 cinemas worldwide, plans to close up to 25 locations and negotiate lower rents for approximately 50 additional sites. This plan is expected to be presented to creditors in the coming weeks, according to well-informed sources. The company intends to implement a restructuring plan, a procedure introduced in 2020 that requires court approval. This new mechanism is to be applied instead of a voluntary company arrangement. Initial reports about this plan came from Sky News. For the restructuring process, Cineworld is being supported by consulting firm AlixPartners. In a statement, the company said, "We continue to review our options," without providing further details. The planned restructuring comes at a time when Cineworld remains under financial pressure, despite delisting from the London Stock Exchange and being acquired by its lenders. The Cineworld Group, which once owned 750 cinemas in ten different countries, is still grappling with the fallout from pandemic-related setbacks. Cineworld's history is marked by a series of debt-financed acquisitions, including the merger with the UK's Cineworld in 2014 and the acquisition of Regal Cinemas in the US in 2018. However, this expansion was severely impacted by the pandemic and associated closures. In 2022, Cineworld filed for Chapter 11 bankruptcy in the US, and following the conclusion of the bankruptcy proceedings, investors exchanged billions in debt for equity in the company. Additionally, the cinema market is suffering from a production shortage. The first joint strike by Hollywood actors and screenwriters in 60 years, which began last summer, largely halted film production. This production interruption has had lasting effects on the entire industry. Cineworld's competitor Vue also warned in its annual report in June about the long-lasting consequences of the strikes. Even if film production resumes in early 2024, Vue anticipates that the impact of the strikes will be felt in 2024 and 2025 due to the reduced number of completed films ready for release.