Source: Cineworld

UK-based exhibitor Cineworld is reported to be looking to close as many as 25 of its worst performing UK cinemas, to re-negotiate rents with a further 50 and ring fence the top performing 25 sites.

Sky News today reported these proposals will be formally outlined to creditors in the coming months as the troubled cinema giant, which is being advised by restructuring specialists AlixPartners, looks to streamline its UK business.

The reports of the swingeing cuts come as rumours swirl about what is happening at the Cineworld sites involving equipment leaseback deals and as-yet-unpaid unpaid rents.

A Cineworld spokesperson said, “We continue to review our options but we don’t comment on rumours and speculation.”

The company’s main landlords are understood to include such major companies as Legal & General and Landsec. 

”Long-term benefits”

Some observers are describing the current restructuring as being for the long-term benefit of the sector. “Valuations [in cinema exhibition] are at an all-time low,” one property expert told Screen. “That mainly reflects the fact that no-one quite believes the credit of these businesses and that they have been waiting for this restructure for the best part of two or three years.

“The market needs to get this out of the way, understand how these businesses will look going forward and accept a haircut on rent if they have to, but their valuations will hopefully improve as a consequence of the certainty and the clarity.”

If the 25 Cineworld sites are closed as predicted, there is likely to be a scramble among other operators to acquire at least some of them.

When Tim Richards, CEO of cinema outfit Vue, was asked this week whether his company might look to take over sites from rival operators, he replied: “Absolutely. They would need to be qualitatively complimentary with our circuit but I think we’ve already demonstrated over the last 20 years that M&A and purchasing cinemas is part of our DNA.”

One question yet to be addressed is the level of job losses that the cinema closures will cause if they go ahead.