The second largest cinema chain of the world – Cineworld, was forced to close down all of its cinemas globally because of the coronavirus related restrictions in many countries of the world and it is now in talks with landlords and film studios to try and save as much of cash as possible, until business resumes as usual.
In its effort of weather the coronavirus crisis, the company has suspended dividends to shareholders while negotiations are also being held by it with banks about its “ongoing liquidity requirements”. The company owns and runs a total of 787 cinemas in 10 countries.
All forms of unnecessary spending has been stopped by the company as it makes “every effort” to reduce and cushion the economic and financial impact of the coronavirus pandemic led closures, Cineworld said.
“This is a situation impossible to imagine a few months ago,” the London-listed company told investors on Tuesday. “This is a painful but necessary process as before the onslaught of the Covid-19 virus, we were excited and confident about the group’s future prospects.”
The company also announced that the executive directors of the company led by its chief executive Mooky Greidinger, will “defer” payment of their full salaries and bonuses for an unspecified amount of time “given the impact of Covid-19 on many of our employees”.
If all the cinemas of the company were forced to closed for three months, the company will be hit so hard that it will not be able to pay its debts and potentially lead to a breach of its covenants, the company warned last month citing an outcome in a worst case scenario.
Last month, employee unions were very critical of the company’s policy of starting to lay off staff as soon as its cinemas were closed in the United Kingdom. The severe criticism as well as public backlash forced the company later to simply furlough staff under the government’s job retention scheme.
The decision of Hollywood studio Universal to make available on all digital and pay-TV platforms globally on 10 April the expected blockbuster Trolls World Tour by the company as it argued that the Hollywood studio Universal instead should have delayed the launch of an exclusive release in cinemas for a time later in the year to which would have allowed the cinema operators to recover from the pandemic shock.
“With very few exceptions, the good relationships we have built up over the years have been supportive and understanding of our efforts,” the company said.
Universal’s decision was a “one-sided move against exhibition [in cinemas], and also a huge business mistake. You do not change the basic rules of the game … especially when your partner is in its worst situation,” said Greidinger in a more direct attack while talking to a trade magazine in the United States.
(Adapted from TheGuardian.com)