TORONTO, Sept. 7,
2022 /CNW/ - (TSX: CGX) – Cineplex Inc. ("Cineplex"
or the "Company") responds to the Chapter 11 filing in the United States commenced today by Cineworld
Group plc ("Cineworld") and certain of its subsidiaries
(collectively the "Cineworld Bankruptcy Proceedings"). Cineplex
remains focused on maximizing and monetizing the value of the
judgment awarded against Cineworld by the Ontario Superior Court of
Justice (the "Court"), as described further below. Cineplex
understands from Cineworld's publicly filed materials, that it is
Cineworld's position that Cineplex's claim against Cineworld is
initially stayed pursuant to the Cineworld Bankruptcy
Proceedings. Cineplex will review in detail the Court
materials filed in connection with the commencement of the
Cineworld Bankruptcy Proceedings and, with the assistance of Moelis
& Company LLC as its financial advisor and Goodmans LLP as its
lead counsel, will explore all avenues available to advance its
claim against Cineworld, and will actively pursue all available
alternatives in the best interests of the Company and its
stakeholders.
Background
As previously discussed in further detail in the Company's
publicly filed materials, on December 14,
2021, the Court released its decision in the action
commenced by Cineplex against Cineworld (the "Decision"). The Court
held that Cineplex did not breach any of its covenants in an
arrangement agreement between Cineplex and Cineworld dated
December 15, 2019 (the "Arrangement
Agreement"), and that Cineworld had no basis for terminating the
Arrangement Agreement. The Court held that Cineworld breached the
Arrangement Agreement and repudiated the transaction to acquire
Cineplex, which actions precluded Cineplex from seeking specific
performance and entitled Cineplex to monetary damages. The Court
awarded damages for breach of contract to Cineplex in the amount of
$1.24 billion CDN on account of lost
synergies, and $5.5 million CDN for
transaction costs, exclusive of prejudgment interest. The Court
also held that Cineplex's shareholders did not have any rights
under the Arrangement Agreement to enforce the agreement or sue
Cineworld for any breach. The Court also denied Cineworld's
counterclaim against Cineplex. On January 12, 2022, Cineworld filed a Notice of
Appeal with the Court of Appeal for Ontario and on January
27, 2022, Cineplex filed its Notice of Cross Appeal. The
hearing in respect of the Cineworld's Appeal and Cineplex's Cross
Appeal is scheduled for October 12
and 13, 2022.
While the judgment and next steps are a key focus for Cineplex
and its advisors, due to uncertainties inherent in appeals as well
as the newly commenced Cineworld Bankruptcy Proceedings, it is not
possible for Cineplex to predict the timing or final outcome of the
appeal of the Decision. Further, even if Cineworld's appeal is not
successful, Cineworld may not have the ability to satisfy the full
amount of any damages or costs awarded by the Court. Cineplex
will continue to explore all avenues and forms of consideration to
satisfy its judgment.
Business Update
As previously disclosed by the Company, Cineplex remains
confident in the recovery of its businesses, its strong capital
management and liquidity, and its efforts to manage financial
uncertainties as it has done during previous economic
downturns. While Cineplex anticipated low business volumes in
August and September due to pandemic related production delays,
August has performed stronger than initially expected and the
Company remains optimistic about consumer demand and content supply
in the fourth quarter of 2022 and in 2023.
About Cineplex
Cineplex (TSX:CGX) is a top-tier Canadian brand that operates in
the Film Entertainment and Content, Amusement and Leisure, and
Media sectors. Cineplex offers a unique escape from the everyday to
millions of guests through its circuit of over 170 movie theatres
and location-based entertainment venues. In addition to being
Canada's largest and most
innovative film exhibitor, the company operates Canada's favourite destination for 'Eats
& Entertainment' (The Rec Room) and complexes specially
designed for teens and families (Playdium). It also operates
successful businesses in digital commerce (CineplexStore.com),
alternative programming (Cineplex Events), cinema media (Cineplex
Media), digital place-based media (Cineplex Digital Media) and
amusement solutions (Player One Amusement Group). Providing even
more value for its guests, Cineplex is a partner in Scene+,
Canada's largest entertainment and
lifestyle loyalty program.
Proudly recognized as having one of the country's Most Admired
Corporate Cultures, Cineplex employs over 10,000 people in its
offices and venues across Canada
and the United States. To learn
more, visit Cineplex.com.
Caution Regarding Forward-Looking Statements
Certain information included in this news release contains
forward-looking statements within the meaning of applicable
securities laws. These forward-looking statements include,
among others, statements with respect to Cineplex's objectives,
goals and strategies to achieve those objectives and goals, as well
as statements with respect to Cineplex's beliefs, plans,
objectives, expectations, anticipations, estimates and
intentions. The words "may", "will", "could", "should",
"would", "suspect", "outlook", "believe", "plan", "anticipate",
"estimate", "expect", "intend", "forecast", "objective" and
"continue" (or the negative thereof), and words and expressions of
similar import, are intended to identify forward-looking
statements.
By their very nature, forward-looking statements involve
inherent risks and uncertainties, including those described in
Cineplex's Annual Information Form ("AIF"), its MD&A for the
year ended December 31, 2021 and for the six months
ended June 30, 2022 (collectively, the "MD&A").
Those risks and uncertainties, both general and specific, give rise
to the possibility that predictions, forecasts, projections and
other forward-looking statements will not be achieved. Certain
material factors or assumptions are applied in making
forward-looking statements and actual results may differ materially
from those expressed or implied in such statements. Cineplex
cautions readers not to place undue reliance on these statements,
as a number of important factors, many of which are beyond
Cineplex's control, could cause actual results to differ materially
from the beliefs, plans, objectives, expectations, anticipations,
estimates and intentions expressed in such forward-looking
statements. These factors include, but are not limited to, the
duration and impact of the COVID-19 pandemic on Cineplex, the movie
exhibition industry and the economy in general, as well as
Cineplex's response to the COVID-19 pandemic as it relates to the
closure of its theatres and location-based entertainment venues,
employee reductions and other cost-cutting initiatives, and
increased expenses relating to safety measures taken at its
facilities to protect the health and well-being of customers and
employees; Cineplex's expectations with respect to liquidity and
capital expenditures, including its ability to meet its ongoing
capital, operating and other obligations, and anticipated needs
for, and sources of, funds; Cineplex's ability to execute
cost-cutting and revenue enhancement initiatives in response to the
COVID-19 pandemic; and risks generally encountered in the relevant
industry, competition, customer, legal, taxation and accounting
matters; the outcome of any litigation surrounding the termination
of the Cineworld transaction; and diversion of management time on
litigation related to the Cineworld transaction. The foregoing
list of factors that may affect future results is not exhaustive.
When reviewing Cineplex's forward-looking statements, readers
should carefully consider the foregoing factors and other
uncertainties and potential events. Additional information about
factors that may cause actual results to differ materially from
expectations and about material factors or assumptions applied in
making forward-looking statements may be found in the "Risks and
Uncertainties" section of Cineplex's MD&A.
Cineplex does not undertake to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable
Canadian securities law. Additionally, we undertake no obligation
to comment on analyses, expectations or statements made by third
parties in respect of Cineplex, its financial or operating results
or its securities. All forward-looking statements in this news
release are made as of the date hereof and are qualified by these
cautionary statements. Additional information, including Cineplex's
AIF and MD&A, can be found on SEDAR at www.sedar.com.
SOURCE Cineplex