Cineworld backers pledge £35m investment if UK rescue plan succeeds

Cineworld's US-based parent will inject £35m into modernising its British cinema estate if a rescue plan being put to creditors is successful.

Sky News understands that Cineworld's backers have agreed to put up the money for the capital investment plan in a bid to catch up with better-performing rivals.

The proposed funding is contained in a document circulated to Cineworld creditors as they prepare to vote next month on a restructuring which could lead to the closure of dozens of UK multiplexes.

"The US Group will provide a further £35m of additional investment to the UK Group, if the restructuring plans are sanctioned by the court, to be used for capital expenditures, including refurbishment and enhancement of viable cinemas," it said.

Details of the new funding come amid growing doubts about the ability of dissatisfied landlords to block the restructuring plan.

Sky News reported earlier this month that British Land, which owns three Cineworld sites that would be adversely affected by the proposals, was contemplating voting against it.

A convening hearing is scheduled to take place next week, with a creditor vote set for late September.

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A Cineworld spokesperson said on Wednesday: "The restructuring plan will provide Cineworld in the UK with the opportunity to obtain further funding to meet its working capital needs, reduce its liabilities, and to benefit from a significant capital expenditure programme from the group."

Cineworld has confirmed plans to close six of its UK multiplexes, but documents circulated to creditors show almost 50 others are in categories requiring landlords to agree to revised rent deals in order to ensure their long-term viability.

According to the proposals, 33 sites - categorised as Class B - "require a reduction of rent to ERV [Estimated Rental Value] rent in order to place the sites on a viable long-term footing".

A further 38 of Cineworld's cinemas would be unaffected, while another 16 Class C1 and C2 leases require reductions to either turnover rent or zero rent in order to render them financially viable.

They added the company did not have sufficient funding to meet a quarterly rent bill on 24 June of £15.9m.

"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."

Cineworld initially held talks about a sale of the business with prospective buyers, but has switched its focus to a formal restructuring process after failing to secure any deliverable offers.

The company is being advised by AlixPartners.

Other cinema operators are poised to step in to take over some of Cineworld's sites.

The company trades from more than 100 sites in Britain, including at the Picturehouse chain, and employs about 4,400 people.

Cineworld grew under the leadership of the Greidinger family into a global giant of the industry, acquiring chains including Regal in the US in 2018 and the British company of the same name four years earlier.

Its multibillion-dollar debt mountain led it into crisis, though, and forced the company into Chapter 11 bankruptcy protection in 2022.

It delisted from the London Stock Exchange last August, having seen its share price collapse amid fears for its survival.

Under the deal struck last year, several billion dollars of debt were exchanged for shares, with a significant sum of new money injected into the company by a group of hedge funds and other investors.

Cineworld also operates in central and Eastern Europe, Israel and the US.

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