The Wall Street Journal reported on Friday that Cineworld, the globe’s second-largest movie-theater chain, is preparing to file for bankruptcy while facing debts of US$4.8 billion.
Cineworld, the London-based parent company of US-based Regal Cinemas, owns 751 branches and has 28,000 employees in ten countries. It also operates theaters under the name of Picturehouse, Cinema City, and Yes Planet. Headquartered in Knoxville, Tennessee, the Regal Cinema chain operated 549 theaters with 7,200 screens as of 2019, making it the second-largest chain in the United States.
Cineworld’s stock price declined more than 80 percent on the London exchange as news of the bankruptcy plans filtered through the investment community. The firm has reportedly hired the firm of Kirkland & Ellis to guide it through the liquidation process on both sides of the Atlantic, assisted by restructuring experts from AlixPartners.
Shifts in movie-going attendance due to the pandemic have been among the challenges being faced by Cineworld and other traditional movie-house venues. CEO Mooky Greidinger had blamed the temporary hold on blockbuster releases as contributing to its decision to close its theaters in New York and other major markets. However, Cineworld seems to be not weathering the storm as well as its rival AMC Entertainment, which recently racked up its highest attendance statistics since the pandemic.
Cineworld executives have yet to publicly comment on the company’s proposed bankruptcy filing. On Wednesday of this week, the firm said it was negotiating a potential funding or restructuring strategy but warned stockholders of a risk of a “very significant dilution” of their interests.
The Cineworld chain had been founded by Steve Wiener in 1995, with its first cinema opening in the UK the following summer. In 2004, it was acquired by the Blackstone private equity group, which sold out its interests in 2010. In 2017, Cineworld acquired the US-based Regal Cinemas for US$3.6 billion, and two years later, tried to acquire Cineplex Entertainment, Canada’s largest theater chain, for US$2.1 billion, only to have Cineworld pull out of the deal.