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Cineworld plots blockbuster sale of British cinema operations

One of Britain’s biggest cinema chains is in secret talks about a sale as part of a strategic review that could lead to a wholesale restructuring of its business.

Sky News has learnt that Cineworld, whose parent company went through a series of insolvency processes last year, is working with advisers on a potential disposal of its UK operations.

Cineworld, which trades from more than 100 sites in Britain and employs thousands of people, has begun contacting prospective bidders in recent days.

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AlixPartners, the restructuring adviser which handled the administration of Cineworld’s London-listed holding company last year, has been drafted in to work on the process.

City sources said this weekend that the sale process was expected to run for several weeks.

They added, however, that the cinema giant was also expected to explore the option of a company voluntary arrangement (CVA) – a further restructuring process which could put an unspecified number of its UK cinemas at risk of closure.

A spokesman for Cineworld at its public relations adviser, Hill & Knowlton, said he was refusing to provide information about many sites the company operated in the UK or how big its workforce was.

In a statement issued to Sky News, he said: “Like many businesses, we are continually reviewing our UK operations.”

Cineworld grew under the leadership of the Greidinger family into a global giant of the industry, acquiring chains including Regal in the US in 2018 and the British company of the same name four years earlier.

Image:
File pic: Geoffrey Swaine/Shutterstock

Its multibillion-dollar debt mountain led it into crisis, though, and forced the company into Chapter 11 bankruptcy protection in 2022.

It delisted from the London Stock Exchange last August, having seen its share price collapse amid fears for its survival.

Under the deal which secured its survival, several billions of dollars of debt were exchanged for shares, with a significant sum of new money injected into the company by a group of hedge funds and other investors.

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Cineworld also operates in central and Eastern Europe, Israel and the US.

The sale process only relates to its UK business, according to insiders.

It was unclear whether Picturehouse, which Cineworld also owns, is also part of the auction.

A number of financial investors are expected to examine offers for Cineworld’s UK business, while rival Vue is also likely to assess whether a bid would be viable.

Last year, Sky News revealed that Vue had assembled backing for a takeover of Cineworld, but was frozen out of a process that was eventually abandoned.

Vue itself has undergone a number of financial restructurings but its balance sheet is now on a sustainable footing after dealing with the twin shocks of the pandemic and the Hollywood writers’ strike.

A Cineworld cinema
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Pic: PA

Since it emerged from bankruptcy protection, Cineworld has appointed a new leadership team, installing Eduardo Acuna, who ran Mexican cinema chain Cinepolis’s operations in the Americas, as its chief executive.

Eric Foss, a former Pepsi executive, was parachuted in as Cineworld’s chairman.

One property industry source said that any attempt by Cineworld to pursue a CVA or other restructuring which compromised landlords was likely to be met with fierce resistance.

Major summer film releases in Britain include Despicable Me 4, A Quiet Place: Part One and Alien: Romulus.

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