One of the world’s largest movie theater chains is dimming the lights to begin the process of rolling back its U.S. footprint.
Cineworld Group PLC is already planning cut leases for 20 of its 505 U.S. locations, according to bankruptcy filings reported by the Wall Street Journal. More closures are likely to come based on reviews over performance and rent costs by the company, which on Wednesday filed for Chapter 11 bankruptcy.
The London-based company, which acquired the Regal Cinemas chain for $3.6 billion in 2018, is the world’s second-largest movie theater group — behind AMC Entertainment Holdings Inc.
Cineworld, which owns 747 movie theaters globally, is expected to seek out concessions from landlords in order to keep its theater operations uninterrupted during the bankruptcy process.
The company’s bankruptcy filing comes as poor ticket sales have failed to meet its financial needs. Theaters have faced a slow recover as moviegoers trickle back in the wake of the pandemic, but returns have been undercut by new films landing on streaming platforms shortly after premiering in theaters.
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Cineworld has more than $5 billion in debt and is facing a roughly $1 billion legal judgment stemming from its failed merger with Canada-based movie theater chain Cineplex Inc. The company took out $800 million to stay afloat amid the pandemic and put itself in position to recover, which Cineworld said hasn’t happened yet.
Chapter 11 bankruptcy would allow the company to cut its liabilities through a possible asset sale or financial restructuring. Cineworld said its lenders have committed to providing a $1.94 billion loan to cover its expenses and get through the restructuring process.
Equity interests in Cineworld will likely be thinned without any guarantee of a recovery for stockholders, the company said. The Greidinger family is Cineworld’s largest shareholder with more than 20 percent of the company’s stock. The family claims it has lost more than $1 billion as Cineworld’s shares have cratered during the pandemic, according to the bankruptcy filing.
Cineworld said it doesn’t expect to be delisted from the London Stock Exchange due to the Chapter 11 filing. The company expects to emerge from court protection during the first quarter of next year.
— Pat Ralph