How Cineworld was left shaken by a toxic cocktail

Linda J. Dodson

Supporters of the deal say the timing has been terrible. “Hindsight is a wonderful thing, the timing was very unfortunate,” a City source says. “It’s not that he’s [Greidinger] been a victim of his own ambition.”

“In a normal world, Mooky would probably be looking like a hero in a year or two,” says one cinema boss.

Coronavirus woes and uncertainty around the potential damage from the Cineplex fallout have caused Cineworld’s share price to plunge to record lows – and almost 90pc lower than the beginning of the year. Spooked by a pile-on from short-sellers earlier this year, the Greidinger family sold off a third of its stake in Cineworld at a discount as part of a refinancing deal.

Cineworld is now on course for radical debt restructuring after its lenders drafted in advisers from FTI Consulting last week for emergency discussions. The move will prompt fears that Cineworld’s debt holders could look to seize control of the business, but optimists believe this would be a worst-case scenario. Ivor Jones, a leisure analyst at Peel Hunt, says a deal with landlords would create a virtuous circle for Cineworld and its lenders.

“A significant provider of Cineworld’s capital is landlords, the company has over 400,” he says. “Right across the world of commercial property, commercial landlords are acknowledging that their rents have to fall. Closing the cinemas probably makes discussions with landlords clearer about their options.

“If they get the landlords to agree to defer rental payments then that reduces the cash burden on the business, which reduces the amount of debt you need.”

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