Cineplex Inc. is getting some additional financial breathing room as the movie industry faces another wave of restrictions tied to the COVID-19 pandemic.
The Toronto-based theatre operator said in a release after Thursday’s closing bell that its lenders agreed to extend certain covenant relief until the second quarter of next year.
"With the Omicron variant spurring new mandated operating restrictions, we felt it was prudent to approach our supportive lenders for the continued suspension of the testing of our financial covenants until the second quarter of 2022," said Ellis Jacob, president and chief executive officer of Cineplex, in a release.
"The timing of these restrictions was unfortunate as we were approaching our busiest period of the year. While we were not able to realize the full benefits of the film Spider-Man: No Way Home, which had the second biggest domestic opening weekend of all time and the biggest December opening ever, we know the industry is recovering and our guests want to be back in our theatres."
The surge in COVID-19 cases across Canada couldn’t have come at a worse time for Cineplex, one of the Canadian companies that has been hit hardest by the pandemic.
Theatres in Quebec and Newfoundland and Labrador have been shuttered in response to the Omicron variant. In Nova Scotia, capacity for movie theatres is capped at 25 per cent maxing out at 50 guests. Most other provinces have introduced 50 per cent capacity measures, with slight variations in Alberta, Manitoba and British Columbia. Only Saskatchewan has not set any capacity restrictions for movie theatres.
In Cineplex’s largest market, Ontario, capacity remains capped at 50 per cent, while concession sales are also on hiatus. Some municipalities, including Kingston, Ont., have more strict guidelines in place for large capacity venues.
While investors will have to wait a little while longer for a sustained period of regular operations, the company’s stock has regained some ground in 2020, with shares up more than 55 per cent year-to-date, but still well below pre-pandemic levels.
Earlier this month, Cineplex was awarded $1.24 billion in damages after British cinema giant Cineworld Group Plc walked away from its planned takeover of Cineplex.
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