Cineworld has abandoned efforts to sell its businesses in the United States, the United Kingdom, and Ireland because it was unable to find a buyer. In addition, the theater chain operator has negotiated a tentative agreement with its creditors to emerge from bankruptcy.
The company, which owns the Picturehouse chain in the United Kingdom, revealed a court filing on Sunday that showed Cineworld plans to raise $2.26 billion to exit bankruptcy proceedings in the first half of 2023.
Cineworld filed for bankruptcy protection in the United States last year due to its $5bn in debt. "This deal with our lenders marks a 'vote of confidence' in our business and moves Cineworld much closer to accomplishing its long-term goal in an evolving entertainment industry," stated Cineworld's chief executive Mooky Greidinger. The company stated that it will continue to explore ideas for the sale of its business outside of the United States, the United Kingdom, and Ireland.
In a petition with the US Bankruptcy Court for the Southern District of Texas, Cineworld stated that the proceeds of the capital raise will be utilized to fund the company's turnaround, including costs associated with reorganizing its debts. It will continue to evaluate proposals for the sale of its 'Rest of World' business, which consists of its activities outside the United States, United Kingdom, and Ireland. Monday morning in London, Cineworld Group shares dropped more than 20 percent.
It is the second-largest theater chain in the world in terms of the number of screens, with over 9,000 screens in about 750 locations. Cineworld operates in 10 countries, including the United Kingdom, the United States, Poland, and Israel, and employs around 30,000 people worldwide. Cinema chains were one of the industries hardest damaged by the pandemic.
During lockdowns, a number of movie theaters were forced to close for long durations or function at a lower capacity due to social distancing restrictions. Cineworld reported a large loss for the first six months of 2020, as it was forced to temporarily close a number of cinemas and film studios delayed the release of numerous blockbuster pictures. Investors are concerned about the company's future, which has caused its London-traded shares to decline by more than 90 percent in the past year. Its current market worth is less than £40 million ($49.1 million).
Throughout the lockdowns, streaming services' popularity skyrocketed, presenting cinemas with formidable competition.
In 2020, Cineworld and its rival AMC, which controls the Odeon Cinemas network, criticized Universal Studios for publishing Trolls: World Tour online during a period when cinemas were forced to close due to coronavirus. Cineworld later secured a contract with Warner Bros to screen films in theaters prior to their streaming availability.
As a result of the rising cost of living, Netflix has recently revealed a precipitous decline in its member base. The newest Hollywood movies have attracted enormous audiences to theaters when lockdown limits were relaxed.
Top Gun: Maverick, Avatar: The Way of the Water, and Dungeons & Dragons: Honor Among Thieves are recent box office successes.