TORONTO, March 16, 2020 /CNW/ - (TSX: CGX) – In response
to growing global concerns around the spread of COVID-19 and
various Canadian government directives, Cineplex Inc. ("Cineplex")
today announced that in an abundance of caution it will be
temporarily closing its network of theatres and location-based
entertainment venues across Canada
starting March 16, 2020, through to
April 2, 2020. The re-opening of
locations will be reassessed at that time.
Cineplex today also provided an update on the status of its
previously-announced transaction with Cineworld Group plc
(LSE: CINE) ("Cineworld") pursuant to which an indirect
wholly-owned subsidiary of Cineworld has agreed to acquire all of
the issued and outstanding common shares (the "shares") of
Cineplex for $34 per share in
cash (the "Transaction").
Under the definitive arrangement agreement entered into among
Cineplex and Cineworld on December 16,
2019 (the "Arrangement Agreement"), closing of the
Transaction remains subject to the satisfaction or waiver of
certain conditions to closing that have not yet been satisfied,
including the receipt of Investment Canada Act approvals,
the representations and warranties of the parties remaining true
and correct (subject to certain materiality qualifiers), the
parties having fulfilled or complied in all material respects with
each of their covenants contained in the Arrangement Agreement, and
as at the date of closing of the Transaction, Cineplex shall have
no more than $725 million outstanding
under its credit agreement, subject to certain exclusions (the
"Debt Condition"). The impact of the COVID-19 outbreak in
Canada and the rapidly evolving
reaction of governments and the public to the outbreak have made
business planning uncertain for the exhibition and location-based
entertainment industries. In response to declining attendance
and certain government directed shutdowns of places of public
gatherings including theatres, Cineplex is managing its business to
reduce expenses in an amount necessary to offset declining revenues
so that Cineplex is supporting its business and would be in a
position to satisfy the Debt Condition. The possibility of
prolonged closures could impact the ability of Cineplex to mitigate
the related revenue decline and satisfy the Debt Condition or other
of the remaining conditions by the Outside Date. It is also a
condition to closing that there not have occurred a "Company
Material Adverse Effect" (as defined in the Arrangement
Agreement). The definition of Company Material Adverse Effect
excludes the impact of certain events and changes, including
any change affecting the motion picture theatre industry generally
and any outbreaks of illness, provided that such events do not have
a materially disproportionate effect on Cineplex relative to other
comparable companies operating in the motion picture theatre
industry.
The parties are continuing to advance the process to obtain the
approvals required under the Investment Canada Act.
The period for the review of the Transaction has been extended
through the end of March, 2020 with the expectation that further
extensions may be warranted under section 22(1) of the
Investment Canada Act in light of the current environment.
Cineplex and its advisors are working diligently to provide that
all conditions to closing are satisfied on or prior to June 30, 2020 (the "Outside Date").
The foregoing summary of certain provisions of the Arrangement
Agreement is qualified in its entirety by the provisions of the
Arrangement Agreement, a copy of which is available on SEDAR at
www.sedar.com.
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. A leading entertainment
and media company, Cineplex welcomes over 70 million guests
annually through its circuit of theatres and location based
entertainment venues across the country. In addition to being
Canada's largest and most
innovative film exhibitor, Cineplex also operates successful
businesses in digital commerce (CineplexStore.com), food service,
alternative programming (Cineplex Events), cinema media (Cineplex
Media), digital place-based media (Cineplex Digital Media) and
amusement solutions (Player One Amusement Group). Additionally,
Cineplex operates location based entertainment complexes specially
designed for teens and families (Playdium) as well as Canada's favourite destination for 'Eats &
Entertainment' (The Rec Room). Cineplex is a joint venture partner
in SCENE, Canada's largest
entertainment loyalty program.
Caution Regarding Forward-Looking Statements
Certain
information included in this news release contains forward-looking
statements within the meaning of applicable securities laws. 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 are subject to
numerous risks and uncertainties, some of which are beyond
Cineplex's control. The forward-looking statements contained in
this news release are based on certain key expectations and
assumptions made by Cineplex.
Forward-looking statements are subject to various risks and
uncertainties which could cause actual results and experience to
differ materially from the anticipated results or expectations
expressed in this news release. The key risks and uncertainties
include, but are not limited to: the COVID-19 outbreak and the
responses of governments and the public to the outbreak (including
declining theatre attendance and mandated government shut downs of
theatres), general global economic, market and business conditions;
governmental and regulatory requirements and actions by
governmental authorities; relationships with employees, customers,
business partners and competitors; and diversion of management time
on the Transaction. There are also risks that are inherent in the
nature of the Transaction, including failure to satisfy the
conditions to the completion of the Transaction and failure to
obtain any required regulatory approvals (or to do so in a timely
manner). The anticipated timeline for completion of the Transaction
may change for a number of reasons, including the inability to
secure necessary regulatory approvals in the time assumed or the
need for additional time to satisfy the conditions to the
completion of the Transaction. As a result of the foregoing,
readers are cautioned not to place undue reliance on the
forward-looking statements contained in this news release.
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. When reviewing Cineplex's forward-looking
statements, readers should carefully consider the foregoing factors
and other uncertainties and potential events. A comprehensive
discussion of other risks that impact Cineplex can also be found in
Cineplex's public filings which are available under Cineplex's
profile on SEDAR at www.sedar.com.
SOURCE Cineplex