Regal Owner Cineworld Eyeing Insolvency Plan, Potential Permanent Close of U.K. Sites

Cineworld
Courtesy of Cineworld

Cineworld in London's Leicester Square

The company is looking to restructure and renegotiate a growing debt pile of $8.2 billion that has been exacerbated by lockdown restrictions and its own recent shuttering of sites in the U.S. and U.K.

Cineworld, the world's second largest exhibitor after AMC and the owner of Regal Cinemas in the U.S., is considering a major insolvency process used to cut costs in the U.K. aimed at helping see it through to its reopening and the return of major new releases in 2021.

The arrangement — known as a Company Voluntary Arrangement (CVA) and first reported by the Financial Times — would help Cineworld restructure and renegotiate a growing debt pile of £6.2 billion ($8.2 billion), which has been exacerbated by the COVID-19 crisis, severe lockdown restrictions and its own recent decision to shutter its cinemas outside of government enforcement.

The company last month made the shock announcement that it would temporarily close all of its U.K. and U.S. sites until early 2021, a move it blamed on the continued postponement of studio blockbusters into the new year. A permanent shuttering of some of its 127 U.K. sites, which includes the Picturehouse chain, is now understood to among the moves being considered as part of the insolvency plan, while Cineworld is also negotiating with individual landlords about reducing its rent.

Ahead of a potential breach of its current loan covenants that would occur in December, Cineworld last month brought restructuring specialists AlixPartners on board to negotiate with its lenders.