British Land, one of Britain’s largest commercial property companies, is considering voting against a restructuring proposal from cinema giant Cineworld that could result in the closure of numerous sites in the UK. According to sources within the property industry, British Land is among several landlords dissatisfied with the formal proposals put forward by Cineworld.
While Cineworld has already confirmed plans to close six of its UK multiplexes, documents shared with creditors indicate that nearly 50 other sites require landlords to agree to revised rent deals in order to ensure their long-term viability. It is understood that a number of Cineworld landlords are not satisfied with the current proposals and are expected to push for more favorable terms.
British Land, which reportedly owns four Cineworld sites, declined to comment on the matter. This news comes after Sky News reported last month that Landsec and Legal & General are also among the largest Cineworld landlords in the UK, although their voting intentions are currently unknown.
According to the documents distributed to creditors, 33 sites fall under the category of “Class B” and require a reduction in rent to Estimated Rental Value (ERV) in order to remain financially viable. Additionally, 38 other cinemas would be unaffected, while 16 Class C1 and C2 sites would need reductions in either turnover rent or zero rent to remain viable.
It has been revealed that Cineworld does not have sufficient funding to meet a quarterly rent bill of £15.9m, due on June 24. The company stated: “The UK group did not have sufficient liquidity to make the June 2024 Rent Payment and required further funding from the US Group to meet this liquidity need. Absent this funding, the UK Group would have been insolvent on a cashflow basis.”
A convening hearing has been scheduled for later this month to progress the restructuring plan. In a statement, Cineworld confirmed that six cinemas are expected to close as part of the plan. The company also expressed gratitude for the support of its landlords, stating that the restructuring will provide a cost base that supports a sustainable long-term business serving audiences across the remainder of its estate.
Initially, Cineworld explored a potential sale of the business, but has since shifted its focus to a formal restructuring process. The company is being advised by AlixPartners. Other cinema operators are reportedly waiting in the wings to take over some of Cineworld’s sites.
Cineworld, which operates more than 100 sites in the UK, including the Picturehouse chain, and employs thousands of people, has seen significant growth under the leadership of the Greidinger family. Its expansion into a global industry giant included the acquisition of Regal Entertainment Group in the US in 2018 and the UK-based Cineworld Group in 2014.
However, the company’s substantial debt burden led to financial crisis and forced it to file for Chapter 11 bankruptcy protection in 2022. Last August, Cineworld delisted from the London Stock Exchange after its share price drastically declined amid concerns about its survival. As part of a deal struck last year, a group of hedge funds and other investors exchanged several billion dollars of debt for shares and injected new funds into the company.
In addition to its presence in the UK, Cineworld also operates in central and Eastern Europe, Israel, and the US. Notable summer releases in the UK include Despicable Me 4, A Quiet Place: Part One, and Alien: Romulus.
