How Cineworld was left shaken by a toxic cocktail

James Bond film’s postponement is just the latest in a string of challenges for the cinema chain

Mooky Greidinger
Cineworld is set to mothball almost 700 sites across the US and UK

Cinema is in Mooky Greidinger’s blood. A third-generation operator, the 68-year-old chief executive of Cineworld’s film heritage can be traced back to 1930 when his grandfather opened a cinema in Haifa, Israel, the city’s first picture house.

Passing over the other opportunities his family business had to offer – the company was previously a conglomerate operating in everything from property to meat imports – Moshe, known as Mooky, Greidinger plumped for a career in cinema.

He took odd jobs on the ticket desk, in the projection room and as an usher in his father’s movie theatres. Alongside his brother and deputy, Israel, Greidinger has grown that family empire to an industry powerhouse encompassing 9,500 screens across 787 sites – making it the second-largest cinema operator in the world behind Odeon owner AMC.

But the empire that Greidinger helped to build is in all-out retreat, as Cineworld prepares to cut as many as 45,000 jobs and the pandemic forces it to mothball almost 700 sites across the US and UK.

Greidinger says his hand was forced after film studio MGM delayed the release of the latest James Bond blockbuster until next year, having originally been postponed from April to November this year.

The delayed release of the latest Bond film has damaged the cinema industry even further Credit: Gareth Fuller/PA

He has pinned the immediate blame on New York governor Andrew Cuomo, whose “inflexibility” in allowing cinemas to reopen has spooked Hollywood studios into delaying movies, Greidinger says.

“We are like a grocery shop with no food,” Greidinger said in an interview following the announcement. “We had to take this decision.”

A lack of blockbuster releases is not Cineworld’s only problem, however. The group has become weighed down by its crushing debt pile, which has ballooned to £6bn following an aggressive expansion into North America.

The industry was stunned when Greidinger announced plans in 2017 to orchestrate a reverse takeover of US chain Regal Entertainment for $3.6bn (£2.8bn), a sum that dwarfed Cineworld’s £1.5bn market cap.

It was, as one industry boss describes it, a move expected of rivals with a track record of embarking on “ego-driven orgy buying sprees”, but not Cineworld.

“Mooky and Israel were not like that, that’s not how they operated,” they said. “All of us were surprised when they bought Regal.”

Greidinger was dazzled by the US opportunity after taking a trip along the east coast with his team to see the cinema experience in the States for himself. His belief in the deal was such that he reached into his own pocket.

Cineworld Group CEO Moshe "Mooky" Greidinger Credit: Gabe Ginsberg/WireImage

The family’s holding company and Cineworld’s biggest shareholder, Global City Holdings, alongside Singapore’s sovereign wealth fund GIC, agreed to fully subscribe to a £1.7bn rights issue which partially funded the purchase.

GIC was also among a number of lenders that stumped up around £270m in loans to Global City Holdings so that Greidinger could fully participate in the rights issue and avoid having the family stake diluted.

If the Regal acquisition was a risky move, so was taking on extra debt, however. Not only was the company more highly levered, but so was the Greidinger family. Short-sellers sensed an opportunity and by November last year the Cineworld boss was forced to deny speculation that GIC was calling in its loans. “This is a long-term partnership,” his spokesman said.

The deal not only gave Cineworld a major foothold in the lucrative US market, but propelled the group to become the second-largest operator in the world. Three-quarters of its revenue is now derived from the US market, in contrast to 15pc in the UK and 12pc across the rest of the world.

But shareholders were less than delighted by the takeover, expressing concern over the debt Cineworld had taken on to finance the deal.

Still reeling from the surprise Regal deal, shareholders were hardly ready for another plot twist last year when Cineworld revealed it was shelling out £1.6bn on Canadian operator Cineplex.

Greidinger attempted to convince the naysayers who had thought Cineworld had bitten off more than it could chew. “Cineworld is a very strong cash machine and we can cope with this debt,” he said at the time the deal was announced.

Despite winning the approval of shareholders, Cineworld pulled out of the deal in June, claiming Cineplex had suffered a “material adverse effect” under the terms of the tie-up, which included a ceiling of $725m on its debts.

Ugly scenes unfolded following the abandoned deal and a legal battle between the pair has now ensued.

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.”

Other observers say that despite their misgivings about some of his recent deals, stakeholders are likely to have faith in Greidinger’s ability to steer Cineworld through the crisis. “If you were a shareholder or debt holder, he looks like the man to run the business because of the accumulated wisdom from his family running a business for three generations. That knowledge and understanding has got to be of significant value in these stranger circumstances,” a City source says.

For all the praise heaped on him by the City and his contemporaries, Greidinger has drawn the ire of his own employees, which claim “disgusting” and “abhorrent” treatment by Cineworld during the pandemic.

Workers have spoken of living in “constant fear” over their job security, saying they are “only just surviving” on furlough pay.

Cineworld is now facing questions from MPs over its use of the furlough scheme which was set up by the Chancellor in an effort to protect jobs during the pandemic.

The Cineworld cinema in Leicester Square on October 05, 2020 Credit: Dan Kitwood/Getty Images Europe

The chain is understood to have furloughed the majority of its staff, but has not said how much has been claimed through the scheme.

Alexander Stafford, a Conservative MP and member of Parliament’s business committee, has accused Cineworld of “cutting and running”.

“If you take taxpayers’ money, you have a duty to keep these jobs going forward,” he says. “Cineworld has been a bit disingenuous by taking the furlough scheme, if they had no intention of keeping these jobs.”

Even a global pandemic is unlikely to undermine Greidinger’s faith in an industry that has been his life, however.

He has vociferously defended the big screen in public on numerous occasions, brushing off the threat of video streaming services such as Netflix.

Otherwise, Greidinger has preferred to stay out of the limelight. “He’s very understated, business-like and commercial,” says a City source. “There’s no Hollywood there.”