RE: Mooky to be given stake in restructured company, what a surprise, he comes out smelling of roses27 Aug 2022 13:41
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hen Cineworld, the world’s second-biggest cinema chain, admitted how close it was to collapse earlier this month, its management said that part of the problem was a lack of Hollywood blockbusters to pull in customers.
The company told investors that until the release of Black Panther: Wakanda Forever in November, the “limited film slate” would have a negative effect on admissions and on the liquidity of the debt-saddled business, which has been battered by lockdowns and the exodus of film fans to streaming services.
But while there has been a drought of entertainment on the big screen, an action-packed thriller played out in Cineworld’s boardroom, as its longtime boss ran out of options.
During the coronavirus pandemic, chief executive Mooky Greidinger twice brought Cineworld back from the brink of bankruptcy, persuading his lenders into agreeing a rescue package.
He had built his third-generation family business into a behemoth, riding a wave of easy credit to take control of UK chain Cineworld in 2014 and US-based Regal Cinemas in 2018.
Now, however, his company is nearly $9bn in debt and lease liabilities — brought on by ambitious expansion plans colliding with the pandemic — look dangerously precarious, as ticket sales dragged and a $1bn payout over the botched takeover of Canadian rival Cineplex loomed on the horizon.
At the start of last week, Cineworld confirmed it was planning a Chapter 11 bankruptcy filing in the US and similar proceedings in other markets. The US bankruptcy process is likely to be initiated within weeks, according to two people familiar with the details.
Before the pandemic, its stock traded at above 180p. By the end of this week, it was just under 2p a share.
A former Cineworld executive told the FT that resorting to bankruptcy would be “a serious emotional blow” to Greidinger, and his brother Israel, who serves as deputy chief executive officer.
“They eat, dream and sleep the cinema business; [Cineworld] was their baby,” he said. But he added that “hubris” had driven them to borrow too much in pursuit of the goal of supplanting US rival AMC as the world’s largest cinema chain. When the pandemic struck, the business unravelled.
During an Israeli court hearing in June over a dispute about local distribution, Mooky said that because of the pandemic “our life’s work collapsed”, according to local media. “I’ve been fighting every day to save what we have built. I hope we succeed but it isn’t certain,” he added.
Once the Chapter 11 filing is complete, C
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