Cineworld is preparing to sound out potential buyers but has strongly denied suggestions that it is being courted by the world’s biggest cinema chain.
The embattled company, which is discussing a Chapter 11 bankruptcy plan in the United States, insisted that neither it nor its advisers and lenders had held talks with AMC Entertainment regarding “the sale of any of its cinema assets”.
In a regulatory filing just before Christmas, AMC, owner of the Odeon chain, said that it had been in discussions with Cineworld’s lenders to acquire some of its cinemas in America and Europe, which it had planned to fund by issuing preferred stock and debt finance.
Cineworld, the No 2 player in the cinemas sector behind AMC, filed for bankruptcy protection in the US in September after being hit hard by disappointing summer audience numbers and amid a struggle to contain its debts.
The likely outcome of the Chapter 11 process is a debt-for-equity swap, handing control of its assets to its lenders, although in parallel with the bankruptcy process Cineworld said it would “run a marketing process in pursuit of a value-maximising transaction for the group’s assets, focused on proposals for the group as a whole”.
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The company said that it expected its “outreach to potential transaction counterparties” to begin this month while separate negotiations over the bankruptcy reorganisation continued.
There had been suggestions that rivals such as AMC and Vue International might seek to acquire parts of Cineworld, but the company made clear yesterday that it would not consider any asset sales on an individual basis. It added that any sale of the group would not include the sale of Cineworld — the plc — itself and therefore would not be subject to Takeover Panel rules.
It repeated its recent warnings that any restructuring or sale agreed with stakeholders would “result in a very significant dilution of existing equity interests” and that there could be “no guarantee of any recovery for holders of Cineworld’s existing equity interests”. Shares of Cineworld, already down almost 90 per cent over the past year, rose 0.8 per cent to nearly 3¾p yesterday.
Analysts said that any rescue of Cineworld, which has 9,139 screens at 747 sites in ten countries, including the Regal chain in America, could involve the Greidinger brothers — Mooky Greidinger, 70, the chief executive, and Israel Greidinger, 61, the deputy chief — remaining at the helm of the business.
However, in its pre-Christmas filing, AMC did hint at a continuing interest, saying that it “reserves the right to continue to explore the acquisition of value-enhancing strategic assets”. In the event of a deal with a rival such as AMC or Vue, the brothers’ involvement almost certainly would cease.
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