Lenders to Cineworld Group have parachuted in advisers for urgent talks on the company’s $8bn (£6.2bn) debt mountain as it mothballs hundreds of cinemas on both sides of the Atlantic.
Sky News has learnt that a syndicate of banks has appointed FTI Consulting to negotiate with the stricken multiplex operator following a pitch process last week.
City sources said on Monday that the announcement about the temporary closure of roughly 660 Cineworld sites in the UK and US – which sent its shares crashing by more than 50% – was likely to presage a formal debt restructuring.
Lenders are also expected to raise the prospect of a company voluntary arrangement, an insolvency mechanism that would pave the way for some permanent closures, according to one insider.
The survival of Cineworld and other cinema operators has been cast into doubt by the duration and intensity of the coronavirus crisis, with the delay to key film releases seen as a tipping point for the industry’s finances.
No Time To Die, Daniel Craig’s final outing as James Bond, was due to open next month but has been pushed back by MGM, the studio behind it, until next April.
In a stock exchange announcement on Monday, Cineworld said it continued to “assess several sources of additional liquidity and all liquidity raising options are being considered”.
45,000 employees will be affected by the mothballing plan, although the number of permanent redundancies is unclear.
The chain has seen its balance sheet particularly hard-hit because of the debt-fuelled acquisition spree which has transformed it into one of the world’s largest cinema operators over the last decade.
Cineworld declined to comment on its talks with lenders.