Cineplex focused on 'maximizing' payout from Cineworld despite bankruptcy filing
Canadian theater chain Cineplex Inc. jumped 6 per cent after a report that it has weighed a merger with Cineworld Group Plc’s U.S. arm and has discussed a potential deal with the U.K. company’s lenders.
Cineplex has proposed taking over Regal Entertainment Group, and would give Cineworld’s lenders debt and stock backed by the combined entity, the Wall Street Journal said Wednesday, citing people with knowledge of the talks who it didn’t identify.
Cineplex rose 6 per cent to $9.32 in Toronto on Wednesday, the biggest increase since Sept. 9.
Cineworld still has the right to make its own restructuring offer to creditors before other alternatives can be proposed, the Journal report added.
Cineworld filed for bankruptcy in Texas earlier this month after racking up US$5 billion in debt. It assessed mergers and other strategic options, including a secondary U.S. listing and selling non-U.S. assets, before the Chapter 11 filing, Deputy Chief Executive Officer Israel Greidinger said in court documents.
Cineworld pulled out of a deal to acquire Cineplex in June 2020 after Covid-19 hit the movie business, shuttering theaters and delaying blockbuster movie releases. Cineplex sued Cineworld for breach of deal terms and a Canadian court has ordered the world’s second-largest cinema chain to pay almost US$1 billion in damages.
Cineworld’s appeal of that ruling and Cineplex’s cross-appeal hearings were scheduled to be held next month. However, the U.S. Bankruptcy Court for the Southern District of Texas on Wednesday denied Cineplex’s attempt to continue with the legal process in Canada while Cineworld navigates its bankruptcy proceedings. That effectively freezes the companies’ litigation for now.
“Cineplex will continue to explore all avenues and forms of consideration to satisfy its judgment,” the Toronto-based company said in a statement late Wednesday. A spokewoman for Cineplex, reached by email, declined to comment beyond the statement.
A representative for Cineworld declined to comment when contacted by Bloomberg.
Cineworld shares rose 2 per cent in London trading on Wednesday to 2.8 pence. The shares have dropped more than 90 per cent this year.