TORONTO, June 12, 2020 /CNW/ - (TSX: CGX) – Cineplex
Inc. ("Cineplex") today announced that Cineworld Group plc
(LSE: CINE) ("Cineworld") has delivered notice (the
"Termination Notice") to Cineplex purporting to terminate the
arrangement agreement among Cineplex and Cineworld dated
December 15, 2019 (the "Arrangement
Agreement"). Under the Arrangement Agreement, Cineworld
agreed to acquire all of the issued and outstanding common shares
of Cineplex (the "Transaction"). Cineplex believes that
Cineworld has no legal basis to terminate the Arrangement Agreement
and that Cineworld has breached its contractual obligations.
Cineworld's repudiation of the Arrangement Agreement has been
acknowledged by Cineplex and the Transaction will not proceed.
Cineplex intends to commence legal proceedings promptly against
Cineworld and seek damages for Cineworld's breaches of the
Arrangement Agreement and failure to discharge its obligations
thereunder.
In the Termination Notice, Cineworld alleges that Cineplex has
taken certain actions that constitute breaches of Cineplex's
covenants under the Arrangement Agreement, including failing to
operate its business in the ordinary course. In addition, Cineworld
alleges that a material adverse effect has occurred with respect to
Cineplex.
Cineplex vigorously denies Cineworld's allegations. The
Arrangement Agreement explicitly excludes any "outbreaks of illness
or other acts of God" from the definition of material adverse
effect and all of Cineworld's allegations stem from an outbreak of
illness and act of God (COVID-19). Cineplex believes that
Cineworld's allegations represent buyer's remorse, and are an
attempt by Cineworld to avoid its obligations under the Arrangement
Agreement in light of the COVID-19 pandemic.
Cineworld has breached the Arrangement Agreement and other
contractual obligations because, among other failures, it did not
use its reasonable best efforts to obtain approval under the
Investment Canada Act as soon as reasonably practicable ("ICA
Approval") and has now repudiated the Arrangement Agreement.
If Cineworld had complied with its obligations to obtain ICA
Approval, Cineplex believes that the ICA Approval would have been
obtained and the Transaction would have closed months ago. Cineplex
will file suit promptly to recover all damages available to it to
under the Arrangement Agreement and hold Cineworld responsible for
its breaches and failure to complete the Transaction at
$34.00 per common share.
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.
Since May 7, 2020, being the date
Cineplex announced that it was relying on the blanket relief
provided by the Canadian Securities Administrators to delay the
filing of its interim financial statements and related management
discussion and analysis for the three month period ended
March 31, 2020, there have been no
material business developments other than as described in this news
release.
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 millions of 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 Canada's favourite
destination for 'Eats & Entertainment' (The Rec Room) and
entertainment complexes specially designed for teens and families
(Playdium). 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 outcome of any
litigation surrounding the termination of the Transaction,
the impact of the COVID-19 pandemic on Cineplex, the motion picture
exhibition industry and the economy in general, including
Cineplex's response to the COVID-19 pandemic as it relates to
theatre and venue closings, employee reductions and other
cost-cutting measures, as well as increased expenses relating to
safety measures taken at Cineplex's theatres and location based
entertainment venues in order to protect the health and well-being
of Cineplex's customers and employees; 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 litigation related to the
Transaction.
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