Cineworld is reportedly considering closing a quarter of its UK cinemas as part of a wide ranging restructuring.
The cinema operator, which delisted from the London Stock Exchange last year after its share price collapsed, is drawing up plans to shut up to 25 cinemas and renegotiate rent agreements at 50 more of its 100 or so UK sites, sources told Sky News.
The chain, which is being advised by consultants Alix Partners, owns cinemas including the Picturehouse chain and employs thousands of people.
The proposals were expected to be outlined formally to creditors, including landlords, in the coming weeks and the restructuring mechanism adopted by the cinema operator was expected to be a restructuring plan rather than a company voluntary arrangement, Sky reported.
Cineworld said: “We continue to review our options but we don’t comment on rumours and speculation.”
The debt-laden chain struggled during the Covid-19 pandemic, which led to enforced closure of its sites for months. It filed for Chapter 11 bankruptcy protection in the US in 2022 and lodged a reorganisation plan with an American bankruptcy court from which it emerged last year. It tried to sell its US, UK and Irish businesses last year but failed to receive any acceptable offers.
Cineworld was founded in 1995 and expanded under the leadership of the Greidinger family and later listed on the London Stock Exchange. Its acquisition of Regal Entertainment created the second largest business in the world by number of screens and it operates in central and eastern European markets including Poland and Hungary as well as Israel and the US.
The restructuring comes as the sector continues its recovery from the lows of pandemic lockdowns.
Tim Richards, founder and chief executive of the cinema operator Vue International, told the BBC’s Wake up to Money programme that the industry had been seeing a “slow recovery” after the pandemic but then was hit again last year by the Hollywood writers’ and actors’ strikes, which affected film productions.
The sector was still suffering from the impact of the stoppages, he added. “We are not going to see a return to post-pandemic levels until some time probably 12 months from now.” Vue had gone through a restructuring with shareholders last year and was now “in very very good shape”, he added.
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Richards said that in 2022 there were 35% fewer films released than in the pre-pandemic era and in 2023 there were 20% fewer films. This compared with the period between 2017 and 2019 when there were three consecutive box office world records set.
“The pandemic hit and then we had a pretty slow recovery both in film production and as an industry … and then the strikes hit,” he said. “It could not have been a worse time. We have a supply issue and not a demand problem.”