British Land is considering voting against a restructuring of Cineworld’s British operations that could lead to the closure of dozens of sites.
Sky News has learnt that British Land, one of Britain’s biggest commercial property companies, is among a number of landlords dissatisfied with formal proposals tabled by the cinema giant.
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.
Property industry sources said several Cineworld landlords were unhappy with the proposals as currently configured and were expected to press for an improvement of the terms.
British Land, which is understood to own four Cineworld sites, three of which would be compromised under the plan, declined to comment.
Last month, Sky News reported that Landsec and Legal & General were among the largest Cineworld landlords in the UK, although it was unclear on Wednesday how they planned to vote on the restructuring.
According to documents sent to creditors, 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”.
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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 that the company did not have sufficient funding to meet a quarterly rent bill on June 24 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.”
A convening hearing has been scheduled to progress the restructuring plan later this month.
Cineworld said in a statement: “We anticipate that six cinemas will close as part of our Restructuring Plan.
“With the support of our landlords, the plan will enable us to deliver a cost base which supports a sustainable long term business serving audiences across the remainder of our estate.”
Cineworld initially held talks about a sale of the business with prospective buyers, but has switched its focus to a formal restructuring process.
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 thousands of 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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Major summer film releases in Britain include Despicable Me 4, A Quiet Place: Part One, and Alien: Romulus.
