The owner of Regal Cinemas declared bankruptcy on Wednesday in a bid to deal with billions of dollars in debt and subpar movie attendance.
Cineworld, which has nearly $5 billion in debt, said it plans to cut costs by renegotiating how much it pays in rent for theaters. The company, which filed for Chapter 11 protection in the United States Bankruptcy Court for the Southern District of Texas, plans emerge from bankruptcy by early next year.
Movie theaters have taken a major financial hit during the COVID-19 pandemic as customers shunned group settings. Adding to their challenges, some film studios are foregoing theatrical releases altogether, choosing instead to premiere highly anticipated movies on streaming services.
U.K.-based Cineworld, which acquired Regal Cinemas in 2017, is the world's second-largest theater operator, with 9,189 screens across 751 locations including in Europe and the Middle East.
Cineworld and other theater chains hoped moviegoers would return en masse once pandemic restrictions were lifted, but business has yet to fully rebound. A May survey from Morning Consult found that many Americans continue to avoid theaters because of ongoing COVID-19 concerns as well as high movie ticket prices.
Cineworld, which has about 28,000 employees, previously said its admissions levels have recently been below expectations. With a "limited film slate" coming in over the next few weeks, Cineworld said it expects the lower ticket sales to continue until November.
The pandemic was "an incredibly difficult time for our business, with the enforced closure of cinemas and huge disruption to film schedules that has led us to this point," CEO Mooky Greidinger said in a statement Wednesday.
Cineworld reported a $656 million loss in March. Last month, the at a potential bankruptcy, causing shares of rival theater chain .
Greidinger said the bankruptcy filing is part of a broader company strategy to "reimagine the most immersive cinema experiences for our guests." The theatrical turnout for "Spider-Man," "Thor" and "Top Gun" show that "people love to go to the movies," he said.
"Once supply of product returns, our business will reap the benefits," he added.
Cineworld said Wednesday it secured $1.94 billion in loans to help the company through the bankruptcy process. Cinemas will continue to operate and employees will continue getting their wages and benefits while Cineworld goes through bankruptcy.
Also weighing on Cineworld's books — a $1 billion legal settlement levied late last year after a botched merger with Canadian movie theater chain Cineplex. The Cineplex case is now on hold until Cineworld comes out of bankruptcy.
— The Associated Press contributed to this report.
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