What next for Cineworld after Chapter 11 filing?
In the Interview, the specialist said a Chapter 11 filing is unlikely to impact Cineworld’s operating costs and labour. This is due to a “difficult labour market” since the COVID-19 pandemic, we were told.
They also said if Cineworld filed a Chapter 11 in a traditional way to “right the ship” and deal with creditors, vendors and landlords, as well as exit unprofitable theatres, the impact on its international operations may be minimal.
However, if Cineworld decides to spin off the entire Regal circuit and exit the US, the specialist said such a decision could impact the focus and CAPEX of its remaining cinemas in the UK, Ireland, central Europe and Israel, given the “breadth and size” of Regal in the US.
The specialist told us the loss leaders at Regal represent 10-15% of the circuit, and Cineworld’s decision gives the sister company an opportunity to consolidate and become much “leaner”. However, such a move could create opportunities for other cinema chains like AMC and Cinemark to pick up assets that Regal might spin off.
Meanwhile, the company still faces a “problematic and potentially financially challenging” situation with Ciniplex, according to the specialist. They believe the USD 1bn penalty for cancelling the deal to take over the Canadian cinema company is “going to become a liability” and might need to be dealt with in “one fell swoop” once a final decision has been made.
Click here to access all the human insights in Third Bridge Forum’s “Cineworld – Regal US Restructuring Opportunities & Recovery Outlook” Interview.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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