British news outlet Sky News reported this week that Cineworld, the world’s second-largest motion picture exhibitor, is pursuing a sale of their UK-based theatres. Cineworld, which also owns and operates Regal Theatres in the U.S., oversees a global network that it built through a series of acquisitions during the 2010s. The prospective sale signals a new era for the exhibitor, as it looks to reduce debt and recover profitability by offloading assets.
Cineworld’s expansion came to a screeching halt in 2020 when the COVID-19 pandemic arrived. The company was left to manage a mountain of debt while almost all its theatres were closed for a year. To add insult to injury, in 2021 Cineworld was ordered by a Canadian court to pay a $1 billion penalty to Cineplex for its failure to complete a promised acquisition of the Canadian circuit. This additional liability was the last straw for the once high-flying business and forced Cineworld to declare bankruptcy in Fall 2022.
Cineworld’s bankruptcy process was painful, resulting in the company being delisting from the London Stock Exchange and wiping out the equity of most pre-bankruptcy shareholders in favor of debt holders who received shares in the newly reorganized company in a debt-for-equity swap.
New ownership brought in new management while paring down its operation significantly. While the Sky News report states that Cineworld’s current consideration is only to sell its U.K.-based theatres, there is some concern as the process evolves it could also put into play a sale of the much larger Regal Theatres circuit across the U.S.
