Cineworld Group has scrapped proposals to sell its Israeli and Eastern European operations.
The struggling cinema chain, which entered Chapter 11 bankruptcy protection in the US last September, told investors on Tuesday that offers for its ‘Rest of the World’ business did not satisfy lenders’ requirements.
It said its cinemas, numbering over 750 globally, would continue to run ‘as usual without interruption’ while it continued with its proposed restructuring.
Financial troubles: Cinema chain Cineworld entered Chapter 11 bankruptcy protection in the United States last September after building up an enormous debt pile
Reports last month suggested private equity giant CVC Capital Partners and hedge fund Elliott Management were interested in acquiring the firm’s businesses in Israel and Eastern Europe.
According to its website, Cineworld owns ten movie theatres in the former territory, while it operates just over 100 across Poland, Hungary, Slovakia, Romania, Bulgaria and the Czech Republic under the Cinema City brand.
The London-listed company had also put its much larger UK, US and Ireland divisions up for sale but halted those plans a fortnight ago when it failed to find a buyer.
Cineworld instead announced a restructuring deal, which would see the group raise £651million via an equity issue and involve lenders offering £1.2billion in new debt financing.
The firm hopes the new arrangement will reduce its £3.7billion debt pile by approximately 90 per cent, mainly through lenders receiving equity in return for releasing their claims, and enable it to fund future business operations.
Last week it filed a ‘plan of reorganisation’ with a bankruptcy court in Texas that was supported by a majority of lenders, but saw shareholders wiped out due to the firm’s high debt volumes.
The FTSE 250 company’s debts soared following the £2.7billion acquisition of Regal Entertainment in 2018, which made it the second largest cinema chain in the world.
Problems were then exacerbated by the coronavirus pandemic forcing cinemas to temporarily close and delaying film production across the world for much of 2020 and early 2021.
Though restrictions have been lifted, ticket sales have been slow to recover and remain far below pre-Covid levels despite a flurry of big-budget releases, such as Avatar: The Way of Water, Top Gun: Maverick and No Time to Die, Daniel Craig’s final outing as James Bond.
At the same time, many movies are first released on streaming platforms like Netflix and Amazon Prime, where customers can watch thousands of titles for a relatively cheap monthly or yearly subscription.
Cineworld Group shares were 3.3 per cent, or 0.03p, down at 0.88p on Tuesday morning. Over the past five years, their value has plummeted by more than 99 per cent.
