The global operator of multiplex theaters has summoned AlixPartners to help it survive the pandemic, according to a report on Sky News this morning.
Cineworld Group, which is listed on the London Stock Exchange, has drafted in a team of advisors from the City of London firm who specialize in debt restructuring. Cineworld, who own Regal in the US among other chains, are carrying a vast debt mountain or around $8 billion that was used to fund expansions. COVID19 has seen their income plummet.
Cineworld furloughed vast swathes of it’s staff and mothballed hundreds of theaters worldwide in response to the pandemic. This is in response to a consortium of Cineworld’s lenders gathering to appoint FTI Consulting and Houlihan Lokey as their representatives to negotiate with the company over the debt.
The company’s shares have been in freefall since the temporary closures were announced. Delay after delay to major motion pictures and ongoing COVID restrictions have just been like kicking a man when he’s down.
Lenders are expected to push for a company voluntary arrangement, this is an insolvency mechanism that protects from total bankruptcy wipeout while paving the way for restructuring of the debt and the organization. This will almost certainly result in permanent cinema closures. 45,000 employees are affected by the mothballing plan currently so those jobs could be at risk.
Cineworld and AlixPartners declined to comment on Thursday. This first major move by one of the big boys is likely to signal the start of the industry tipping point. Others will follow in coming months.