Vue International, Britain’s third-biggest cinema chain, is close to bringing the curtain up on a £1bn recapitalisation that will see its lenders take ownership of the business and put it back on a sustainable financial footing.
Sky News has learnt that Vue, which was founded and is run by Tim Richards, one of the industry’s most prominent figures, is on the brink of an agreement that will reset its balance sheet in the wake of the COVID-19 pandemic.
City sources said on Wednesday night that Vue had been in talks for weeks about a comprehensive agreement that would see £465m of existing debt converted into equity.
The debt-for-equity swap will see the Alberta Investment Management Corporation (AIMCo) and Omers, the Canadian pension funds, relinquish their shareholdings.
They took control of Vue in 2013 in a deal worth close to £1bn and subsequently presided over a string of acquisitions which helped turn the group into Europe’s largest cinema operator.
In 2019 – a record year for Vue – they began to explore a sale but did not conclude a deal before the COVID-19 crisis brought the leisure industry to its knees.
Sources said the financial restructuring would give the company, which employs more than 8,000 people, access to an additional £75m of liquidity, and enable it to resume its role as a consolidator of a still-fragmented global industry.
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Mr Richards, who also chairs the British Film Institute, has talked about the post-pandemic era becoming “the second golden age of cinema” as audiences flock back to entertainment destinations.
Since its pandemic-induced troubles, Vue’s performance has rebounded strongly.
One source said that every one of its markets exceeded the three-year average for admissions in the last week, while it also marked the first time that Vue had recorded consecutive weeks over 1.8m customers since reopening.
Performance has been buoyed by the arrival of films such as Top Gun: Maverick, starring Tom Cruise, and Minions: The Rise of Gru.
Over the last four weeks, it has seen an 18% increase in admissions versus the three-year average.
Vue trades from 228 sites, operating nearly 2000 screens in nine European markets, including Germany, Italy and Poland.
The company was forced to furlough thousands of UK-based employees during the pandemic, with its sites shut for months.
Mr Richards was also forced into a brief skirmish with Vue’s UK landlords as he sought rent reductions during the period of closures.
Two of the top three biggest films in UK history have, however, been released in the last year – Daniel Craig’s final appearance as James Bond in No Time to Die, and Spiderman: No Way Home.
In the UK, Vue ranks behind only Cineworld and Odeon by number of sites.
Insiders said the restructuring, which is expected to complete later this year, would not affect landlords, suppliers or employees.
It was unclear how long Vue’s new owners – its current lenders – would seek to retain control before selling or floating the company.
Vue declined to comment on Wednesday night.
