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One of the UK’s largest cinema chains is considering a restructuring that could see it shed unprofitable sites as part of a sale process.
Cineworld has appointed AlixPartners to undertake a strategic review of its business, which could include a potential sale, Sky News reported. It is also looking at a potential company voluntary arrangement, a restructuring process that allows tenants to back out of leases at unprofitable sites.
The CVA process has been criticised by real estate bodies as being unfairly tilted toward landlords, who rank behind other creditors in being repaid and can be subject to lease terminations.
Cineworld has about 100 sites in the UK and anchors many shopping centre and leisure schemes. Closures would see landlords needing to either find new uses for cinema sites or find new operators in a market hit by threats such as the pandemic, the rise of streaming and the recent Hollywood writers strike.
Cineworld went through a major restructuring last year, during which it undertook a debt-for-equity swap, wiping out shareholders in the listed company and allowing hedge funds and other debtholders to take ownership. It was subsequently delisted from the London Stock Exchange.
Cineworld also has operations in the U.S. and Europe, but the strategic review only relates to the UK, Sky News reported.
Large rival cinema chains like Vue have also undertaken financial restructurings in recent years.
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