Cineworld eyes UK cinema closures and rescue deal
Cineworld is looking to arrange a rescue deal that could mean UK cinema closures, the BBC understands. One option being discussed with bank lenders is a company voluntary arrangement, an insolvency process that could help Cineworld cut its rent bill.
According to the Financial Times, which first reported the news, Cineworld has appointed restructuring experts AlixPartners. Like other cinema chains, Cineworld has been hit hard by the lockdown.
The company reported a huge loss for the first six months of the year after it was forced to temporarily close some cinemas, and movie studios delayed the release of some blockbusters.
The cinema giant warned in September that it might need to raise more money in the event of further coronavirus restrictions or film delays due to Covid-19.
The coronavirus crisis has hit the film and entertainment industry hard. Cineworld swung to a $1.6bn (£1.3bn) loss for the six months to June as its cinemas were forced to close as a result of Covid lockdowns. Although cinemas reopened when restrictions were relaxed, delays in big budget releases – such as the new James Bond movie – led Cineworld to temporarily close its UK cinemas on 9 October until further notice.
Rival Odeon cut opening hours in October for the same reason, and all cinemas in England have been closed during the second lockdown which began on 5 November. Cinemas can open in Scotland if they meet certain criteria, but Cineworld is closed throughout the UK.
The chain has been in talks with lenders to try to negotiate waivers on banking agreements, which fall due in December and in June next year. Company voluntary arrangements (CVA) have been used by retailers are part of restructurings to push through closures and rent cuts. But they have faced opposition from landlords.
However, a source stressed to the BBC that a CVA was only one option being discussed. The Financial Times said Cineworld had been individually negotiating with landlords for rent cuts at its 127 sites. Cineworld declined to comment.