Global theater operator Cineworld is working with a smaller real estate footprint in the United States after emerging from Chapter 11 bankruptcy proceedings, a reflection of the reduced demand for movie theaters as a result of the pandemic.
The United Kingdom-based chain used the bankruptcy court to reject about 150 of its property leases and reach deals with landlords before assuming more than 350 of its unexpired leases — mostly under its Regal brand in the United States.
Cineworld owes varying amounts to landlords and other parties for its assumed U.S. leases totaling up to $24.4 million, according to court documents. That ranges from $357 for a Regal Cinemas at Windward Mall in the Honolulu area to $3.6 million for an United Artist IMAX Theatre in King of Prussia, Pennsylvania, according to court documents.
The amounts are subject to change based on further negotiations. For example, Cineworld is still negotiating with a Kansas City, Missouri-based landlord on various United States leases.
Cineworld and its subsidiaries completed financial restructuring this week and emerged from Chapter 11 after reeling from a pandemic-fueled slump in ticket sales. The restructured Cineworld also named a new executive board with global expertise it expects to guide the company through the competitive international cinema marketplace.
Movie theater operators are facing challenges from the changing tastes of modern audiences who now have the option of watching blockbusters at home within a few months, so movie-goers want more of an experience when they go to the cinema.
Global Portfolio
While its United States footprint is smaller than before it filed for bankruptcy last year in the Bankruptcy Court for the Southern District of Texas, Houston division, it still makes up the lion's share of Cineworld's global portfolio.
In the United Kingdom, Cineworld entered into administration earlier this week and stopped trading on the London Stock Exchange. The movie theater operator has identified 30 sites that must be reworked to improve performance and reduce its debt out of more than 100 leases.
Cineworld has not responded to multiple media requests from CoStar News regarding plans for its real estate portfolio.
Cineworld's around 350 United States locations post-bankruptcy — down from about 500 prior to filing for Chapter 11 — still makes it the second-largest movie theater operator in the country behind AMC Theatres, which has 660 locations with 8,200 screens in the United States. Plano, Texas-based Cinemark is the third-largest United States movie theater chain with 317 locations and 4,391 screens across the country, according to a statement.
Cineworld's growth in the United States — and its debt — was largely a result of its 2017 purchase of Regal Entertainment Group for about $3.6 billion.
With Cineworld's bankruptcy coming to a conclusion, it leaves the door open to ongoing litigation that was put on hold involving Toronto-based Cineplex while Cineworld was in protection of Chapter 11 of the United States Bankruptcy Code. The litigation involves damages a Canadian court ruled Cineworld to pay Cineplex in December 2021 over Cineworld's failed takeover attempt of Canada's largest movie operator with more than 170 movie venues.