The roar of the box office as Top Gun: Maverick landed in cinemas in summer 2022 marked the beginning of the return of movie theaters, but didn’t erase the losses incurred over the course of the pandemic. For Cineworld, a global company on the hook for millions of dollars in rent on leases while theaters sat dormant, 30,000 jobs were on the line. AlixPartners came on board to help rationalize Cineworld’s real estate portfolio, negotiate a better screen advertising contract, and, ultimately, navigate Chapter 11 proceedings.

To stem the debt flow, AlixPartners helped optimize Cineworld’s real estate portfolio, securing over $100 million per year in rent reductions, reducing lease length by around 15%, and reducing COVID deferral obligations by around $250 million. In addition to those savings, the real estate optimization process yielded $50 million in landlord contributions toward capital expenditures for various theaters to improve facilities and generate additional ticket sales. Finally, the AlixPartners team achieved significant loss avoidance savings by working with the Cineworld real estate team to identify theaters with historically poor performance, forecast future performance, and close underperforming theaters, achieving a further $25 million in savings.

Moving ahead, it was crucial to renegotiate existing U.S. screen advertising-related contracts with NCM (and by extension its debtors), which were based on an outdated business model reliant on competition for good seats to get audiences into the auditorium early enough to view ads. Seat selection technology had rendered this an anachronism. AlixPartners and the debtors engaged in a months-long process, evaluating potential providers and desired contract terms as well as analyzing the viability of bringing screen advertising services in-house, through NCM’s filing for bankruptcy protection.

Through this process, we helped transition the business from the old management to the new, serving in interim roles to set the company up for success on the far side of the turnaround. Extensive litigation between NCM and Cineworld threatened any alternative option, with expensive and protracted litigation that would preclude operations during the peak summer movie period. The excruciating process culminated in mediation, and a new U.S. screen advertising agreement improved revenue and operational efficiencies in the range of $250 to $300 million over the course of the 10-year agreement. 

Funding the new cinema experience

At the point that Cineworld filed for Chapter 11, the company had around $5.1 billion in debt, added to which was the $1.9 billion debtor-in-possession loan. We negotiated with lenders to reset the capital structure, reduce debt, and induce their reinvestment in the company as the new owners, aided by a detailed 5-year cinema-level business plan forecast. We also worked closely with the company’s investment banker to support two different sales processes.

The approved business plan formed the basis for an agreement with the lenders to move forward. This agreement reduced the company’s debt by around $4.53 billion, raised approximately $800 million in new equity capital, and secured new debt financing in the aggregate amount of approximately $1.71 billion, including a new revolving credit facility of $250 million. With this strengthened and recapitalized balance sheet, the company was well-positioned to pursue future strategic initiatives and continue improving the cinema experience, so the next time something big landed in theaters, they could make it roar.


reduction in debt


new equity capital raised

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