Cineworld To Axe Hundreds Of Jobs In Blockbuster Restructuring Plan

Cineworld will this week unveil a sweeping overhaul that will cost hundreds of jobs and reduce its British footprint by at least a quarter.

Sky News has learnt that the cinema operator will publish details of a restructuring plan on Friday that will result in the closure of around 25 sites across the UK.

City sources said that around half a dozen Cineworld cinemas would begin a closure process immediately and close their doors for the last time later in the summer.

The precise number of job losses was unclear on Thursday, although one source said it would be "at least in the hundreds".

Cineworld's public relations advisers at Hill & Knowlton failed to respond to enquiries.

The company has been in preliminary talks with some of Britain's biggest commercial landlords, including Landsec and Legal & General, about its restructuring plans.

A majority of creditors will need to approve the cinema operator's proposals to close about 25 sites, with rent reductions being sought at a further 50.

Roughly 25 cinemas will be unaffected if the plan is approved.

A number of landlords are said to be considering opposing the proposals, although it is unclear whether that would be in sufficient number to block the restructuring plan.

Cineworld initially held talks about a sale of the business with prospective buyers, but has now switched its focus to a formal restructuring process.

The company is being advised by AlixPartners.

Other cinema operators are expected to step in to take over some of Cineworld's sites.

The company trades from more than 100 sites in Britain, including at the Picturehouse chain, and employs thousands of people, although its public relations adviser has refused to confirm either figure.

Cineworld grew under the leadership of the Greidinger family into a global giant of the industry, acquiring chains including Regal in the US in 2018 and the British company of the same name four years earlier.

Its multibillion dollar debt mountain led it into crisis, though, and forced the company into Chapter 11 bankruptcy protection in 2022.

It delisted from the London Stock Exchange last August, having seen its share price collapse amid fears for its survival.

Under the deal struck last year, several billion dollars of debt were exchanged for shares, with a significant sum of new money injected into the company by a group of hedge funds and other investors.

Cineworld also operates in central and Eastern Europe, Israel and the US.

Since it emerged from bankruptcy protection, Cineworld has appointed a new leadership team, installing Eduardo Acuna, who ran Mexican cinema chain Cinepolis's operations in the Americas, as its chief executive.

Major summer film releases in Britain include Despicable Me 4, A Quiet Place: Part One, and Alien: Romulus.

(c) Sky News 2024: Cineworld to axe hundreds of jobs in blockbuster restructuring plan

UPDATE (Friday, July 26)

Cineworld has today announced a Restructuring Plan to restore the business to profitability. In a statement to the press they said:

Against a background of increasingly high and unsustainable operating costs, the business is set to implement a Restructuring Plan (RP) that will enable it to address its lease portfolio and rental terms with landlords in the UK.

The company’s proposal is primarily to reduce rent to market level at some UK locations and to exit six sites (Glasgow Parkhead, Bedford, Hinckley, Loughborough, Yate and Swindon Circus) that are commercially unviable, so that the business can return to profitability.

In addition, the RP will provide Cineworld with the opportunity to obtain further funding to meet its working capital needs, reduce its liabilities, and to benefit from a significant capital expenditure programme in the UK.

Cineworld is beginning a consultation process with employees at the six affected cinemas and will offer redeployment to as many of them as possible at nearby sites.

If the Restructuring Plan is approved by the court, it is expected to become effective in late September 2024. The total number of impacted sites cannot be confirmed until the process is complete. The RP will not affect the Cineworld business outside of the UK.

While this process is ongoing, all Cineworld cinemas in the UK will continue to operate as normal.

A Cineworld spokesperson said:

“We are implementing a Restructuring Plan that will provide our company with a strong platform to return our business to profitability, attract further investment from the Group, and ensure a sustainable long-term future for Cineworld in the UK.”