Cineworld lenders prepare to oust CEO in management shake-up

The former finance chief of Regal Cinemas is the leading candidate to replace Mooky Greidinger as chief executive of Cineworld, as the ailing cinema chain’s lenders plot a major management shake-up following bankruptcy proceedings according to several people close to them.

A potential management reshuffle would probably mean Greidinger, Cineworld’s chief executive since 2014, would be forced to relinquish control of his third-generation family business, the people said. Originating from a single cinema founded by Greidinger’s grandfather in 1930 in the Israeli town of Haifa, the younger Greidinger transformed the business into the world’s second-biggest cinema chain with 751 sites in 10 countries.

The Greidinger family own around a fifth of Cineworld stock through a family trust, and its stake is likely to be wiped out along with other shareholders and unsecured creditors when the bankruptcy process is completed.

David Ownby, who was Regal’s chief financial officer for nine years until 2018 when it was acquired for $3.6bn by Cineworld in a reverse takeover, has been serving as an adviser to Cineworld’s highest priority creditors, which are steering the bankruptcy process, according to multiple people familiar with the matter.

Ownby had previously been the Regal board’s chosen successor for chief executive after spending nearly two decades at the company, until his hopes of the top job were dashed by Cineworld’s surprise acquisition, at which point he was bought out of his contract. Most recently, he served as CFO at pet equipment supplier Radio Systems Corporation.

Whoever leads Cineworld out of bankruptcy faces a daunting set of challenges: boosting ticket sales that still lag pre-pandemic levels and halting an exodus of movie-goers to streaming platforms. Cineworld is expected to emerge from Chapter 11 bankruptcy proceedings within the first half of the year, after entering into the process in September weighed down by $8.8bn in debt and lease liabilities.

Israel Greidinger, Mooky’s brother and deputy CEO; Nisan Cohen, Cineworld’s chief financial officer; and Renana Teperberg, the company’s chief commercial officer would all likely leave if Mooky Greidinger loses the top job, according to people close to discussions about the company’s future.

“I feel very sorry for Mooky because it’s a tragedy: he put his life into it, the company was going great guns . . . Covid hits and that was impossible to overcome,” said a former Cineworld board member. They added that Greidinger was “not the easiest guy in the world” to work with “but in terms of management, I don’t think there’s a better team anywhere in the world than what they’ve got there.”

Greidinger spearheaded the international expansion of his family business, then called Cinema City: first into central and eastern Europe in 1997 before he rode a wave of easy credit to take control of UK chain Cineworld in 2014 and US-based Regal Cinemas four years later.

Lawyers for Cineworld and its secured lenders are pushing ahead with plans for a debt-for-equity swap, which would give the creditors control of the business.

Cineworld’s main lenders, which collectively own $4bn of secured debt, include major institutional investors, such as Invesco, Eaton Vance and State Street. These and other first lien lenders have hired Houlihan Lokey to advise them on next steps.

“Most of the time [after a debt-for-equity swap], the management team stays in place, however here the management team is pretty polarising . . . and there are definitely strong views as to whether this is the strongest management team or not,” said a person close to the bankruptcy proceedings.

A formal hiring process to replace Greidinger is yet to get under way and the lenders are likely to consider other candidates in addition to Ownby. It is also possible Greidinger may be given a payout or a transitional role, according to Cineworld insiders.

Cineworld has received several offers for its eastern European and Israeli operations, including from hedge fund Elliott Management and buyout group CVC Capital Partners, but no majority-cash bids for the whole business as part of a parallel sales process.

Cineworld and its main lenders are putting final touches to a restructuring support agreement, which will outline how the debt-cutting plan and a new rights offering will work, as well as set out the current management team’s responsibilities during the transition.

Cineworld, Ownby, Houlihan Lokey and lawyers representing the first-lien lenders all declined to comment.