Cineworld, the world’s second largest cinema chain, is looking into a Company Voluntary Arrangement (CVA) in the UK, which would allow it to restructure and renegotiate a mounting debt pile caused by unpaid rents due to ongoing closures.
Deadline can confirm that a potential CVA, first reported by the Financial Times, is one option being explored. Permanently closing a portion of its 127-site estate in the UK is also on the table.
The CVA would allow the company, which has £6.2BN in debt, to work out a viable payment schedule for money owed. Cineworld appointed restructuring specialists AlixPartners to negotiate with lenders last month; the process grants the company one month to reach an agreement.
In October, UK landlord AEW sued Cineworld for £308,000 in unpaid rent. The owner of London’s Trocadero Centre is also suing the chain for £1.4m in unpaid rent from its flagship Picturehouse Central site.
Cineworld re-shut all of its cinemas in both the U.S., where it operates the Regal chain, and the UK, last month. The company initially blamed New York governor Andrew Cuomo for not allowing sites in the key box office market to re-open. However, NY venues can now operate again, but Regal is closed again with a lack of big-ticket releases posing an ongoing challenge.
The company hopes the CVA process will allow it to survive until the spring, when the arrival of titles including Bond pic No Time To Die (April 2) could prove key – that’s if they stick to the current dates.
According to the FT, fellow UK chains Vue, Odeon and Everyman have also hired advisers to negotiate with lenders and landlords.
Cineworld Group’s share price bounced back last week after news of positive developments in the process to produce a COVID-19 vaccine. The value remains heavily down on its pre-pandemic price.