Struggling cinema chain Cineworld has said its screens will remain open despite its plans to file for administration to cut its huge debts.
Cineworld, which is the world’s second-largest cinema chain, was hit hard by the Covid pandemic when many of its theatres were forced to close. But it has now announced plans to slash its $5bn (£3.9bn) debt pile. The firm, which owns the Picturehouse chain in the UK, said it was still business as usual for its cinemas.
“Cineworld continues to operate its global business and cinemas as usual without interruption and this will not be affected by the entry of Cineworld Group plc into administration,” it said.
“The group and its brands around the world – including Regal, Cinema City, Picturehouse and Planet – are continuing to welcome customers to cinemas as usual.”
Cineworld has more than 28,000 staff across 751 sites globally, with 128 locations in the UK and Ireland.
Last year, it filed for bankruptcy protection in the US but it hopes to emerge from this next month following the restructuring of its finances.
Cineworld will apply for administration in July, which will see shares in the firm suspended and existing shareholders wiped out.
The restructuring of the company’s finances will see its debts cut by about $4.5bn. A sale of rights in the business has raised $800m and it will also have access to a further $1.46bn in funds if required.
As well as the hit to trading during the pandemic, cinemas are also facing tough competition from streaming services.
Earlier this year, Cineworld had to drop its plans to sell its businesses in the US, UK and Ireland after it failed to find a buyer.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said she expected Cineworld to emerge from its restructuring as “a dramatically slimmed down player in the movie world”.
She noted that Regal movie theatres began closing in the US earlier this year, adding that it seemed unlikely that its UK cinemas would “escape restructure indefinitely”.
“Given the shakeup of the movie industry and the might of the streaming giants, ticket sales will never fully recover to the heady days of the past, so focusing on the improving experience for die hard movie fans in a smaller number of more theatres is likely to the focus, to boost margins and increase ancillary spend,” she said.
In 2019, the last full year before the pandemic hit, Cineworld reported sales of $4.4bn.
While cinema audiences have been returning, Cineworld said last year that it expected admissions in both 2023 and 2024 to remain below pre-pandemic levels.
