Cinema chain Cineworld calls in AlixPartners and PJT Partners
The world's second-biggest cinema chain Cineworld has brought in a team of consultants from AlixPartners and PJT Partners to help it come through the most challenging period in its 25-year history.
The outbreak of the Covid-19 pandemic and the resulting closure of cinema’s (or reluctance to visit cinema’s) is having a devastating impact on the cinema world. For Cineworld no different – the British cinema company has over 9,500 screens across 790 sites in 10 countries in Europe and the US, and across the board, the group is operating at less than 25% of its capacity.
Its pressures are exacerbated by the fact that large studios are postponing major releases such as the new James Bond film. Daniel Craig's final outing as James Bond, ‘No Time To Die’, was due to open next month but has been pushed back by MGM, the studio behind it, until next April.
Facing an $8 billion (£6.1 billion) debt pile, the result of a debt-fuelled acquisition spree which has transformed it into the world’s second largest player, Cineworld has now drafted in AlixPartners to help steer it through restructuring talks.
Lenders however have tightened their belts to Cineworld amid doubts about the cinema’s survival prospects. Last week, one of the largest syndicate of Cineworld's lenders appointed consultants from FTI Consulting and Houlihan Lokey to negotiate with the company over its debt.
The move comes shortly after Cineworld confirmed it will close all its UK (127 Cineworld and Picturehouse theatres) and US (536 Regal theatres) movie theatres, leaving as many as 45,000 workers (temporarily) unemployed. According to Chief Executive Mooky Greidinger, operations might resume in “two months, or a bit longer.”
The news sent the company's shares plummeting to an all-time low, and lenders are now expected to raise the prospect of a company voluntary arrangement, an insolvency mechanism that would pave the way for some permanent cinema closures.
Meanwhile, Cineworld is working with consultants from PJT Partners on strategic and financial options to see it through the coronavirus pandemic. While the Covid-19 virus was earlier expected to be curbed after the first wave, the duration and intensity of the coronavirus crisis has made the future of cinema operators significantly more complex.
