Cineworld, the second-largest cinema chain in the world, has announced that it is dropping its major sale plans and instead proposing a new debt deal. The plans includes reducing its debt by approximately $4.53 billion, mainly through equity stakes and raising $2.26 billion to emerge from bankruptcy this year. Cineworld had previously been seeking to sell its US, UK, and Ireland businesses, but was unable to find a buyer. As such, it has terminated the marketing process and decided to instead focus on the reorganization.
The CEO of Cinewold, Mooky Greidinger, has commented that the agreement with the lenders is a “vote-of-confidence” in the business, and a step in the right direction towards achieving long-term strategic plans. Despite this, Cineworld has announced that it is still open to selling its ‘Rest of World’ business, which comprises of operations in Poland, the Czech Republic, Slovakia, Hungary, Bulgaria, Romania and Israel, should an all-cash bid sufficiently exceed the value established under the restructuring plans.
CVC Capital Partners and activist investor Elliott Management have both separately proposed takeover bids for Cineworld’s eastern Europe and Israeli operations. Shares in the London-listed company have tumbled by as much as 38% following the news that the major sale plans were scrapped. If the restructuring plans are successful however, Cineworld will be able to emerge this year as a stronger, debt-free business.
Mooky Greidinger is the CEO of Cineworld, who is leading the company through this difficult time and navigating the reorganization process. He has been with Cineworld since 2013, and has previously been noted for his entrepreneurial views and success in rapidly-growing the business into a global powerhouse. Greidinger has already implemented various strategies to keep Cineworld afloat, including rent-waiving and government-funded salary support to help save thousands of jobs.
Overall, Cineworld’s plans to drop its major sale plans and restructure its debts could be a long-term positive for the business. The restructuring plan, if successful, will reduce Cineworld’s debts significantly, allowing it to emerge from bankruptcy debt-free. The decision has been met with scepticism by investors, however, who initially hoped to cash in on a sale process. It will be important to watch the course of Cineworld’s future, and see if the company can emerge debt-free as promised.
