Cineworld Group abandons plan to fire its Eastern European and Israeli companies as bids fail to meet creditors’ demands
- The company said its cinemas would continue to run “as usual without interruption.”
- Cineworld entered Chapter 11 bankruptcy protection in the US last September
- Debt soared following the acquisition of Regal Entertainment for £2.7bn in 2018
Cineworld Group has scrapped proposals to sell its Israeli and Eastern European operations.
The struggling movie theater chain, which went under Chapter 11 bankruptcy protection in the US last September, told investors Tuesday that offers for its “Rest of the World” business fell short of backers’ demands.
It said its cinemas, more than 750 worldwide, would continue to run “as usual without interruption” as it proceeded with the proposed restructuring.
Financial troubles: cinema chain Cineworld entered Chapter 11 bankruptcy protection in the United States last September after accumulating a huge mountain of debt
Reports last month suggested private equity giant CVC Capital Partners and hedge fund Elliott Management were interested in acquiring the company’s operations in Israel and Eastern Europe.
According to the website, Cineworld owns ten cinemas in the former area, while operating just over 100 under the Cinema City brand in Poland, Hungary, Slovakia, Romania, Bulgaria and the Czech Republic.
The London-listed company had also put its much larger divisions in the UK, US and Ireland up for sale, but halted those plans two weeks ago when it failed to find a buyer.
Cineworld instead announced a restructuring deal, under which the group would raise £651m through an equity offering and involve lenders offering £1.2bn in new debt financing.
The company hopes the new arrangement will reduce its £3.7bn mountain of debt by around 90 per cent, mainly through lenders receiving equity in return for the release of their claims, and allow the company to fund future business activities.
Last week it filed a “reorganization plan” in a Texas bankruptcy court that was backed by a majority of lenders, but saw shareholders wiped out over the company’s high debt.
The FTSE 250 company’s debts soared following its £2.7 billion acquisition of Regal Entertainment in 2018, making it the world’s second largest cinema chain.
The problems were then exacerbated by the coronavirus pandemic, forcing movie theaters to temporarily close and film production around the world to be delayed for much of 2020 and early 2021.
While restrictions have been lifted, ticket sales are slowly recovering and remain well below pre-Covid levels despite a spate of big budget releases such as Avatar: The Way of Water, Top Gun: Maverick and No Time to Die , Daniel Craig’s last performance as James Bond.
At the same time, many movies are first released on streaming platforms such as Netflix and Amazon Prime, where customers can watch thousands of titles for a relatively inexpensive monthly or annual subscription.
Cineworld Group Shares were down 3.3 percent, or 0.03 pence, to 0.88 pence on Tuesday morning. In the past five years, their value has plummeted by more than 99 percent.