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Canadian largest exhibition chain Cineplex on Monday said it is working toward reopening six theaters in Alberta on June 26, the first step in a plan to “reopen as many of its locations as it can” on July 3. Cineplex has 165 cinemas and 1,695 screens, which accounts for about 75% of the country’s market share of box office.
The news comes as Cineplex, whose theaters have been shuttered since March 16 because of the coronavirus pandemic, is moving forward after a potential $2.1 billion deal to be acquired by UK giant Cineworld fell through late last week. Cineplex today referred to the deal implosion, which has seen blame cast by both sides, an “abandonment.”
“Cineworld’s decision to abandon the Transaction was a scenario that Cineplex had considered and planned for,” Cineplex said in a press release. “Cineplex has developed a robust contingency plan for operating its business and improving its financial position on a go forward basis as one of Canada’s leading entertainment and media companies.”
Like other exhibitors waylaid by the COVID-19 closures, Cineplex has had to undertake widespread temporary layoffs or salary reductions for full- and part-time employees, modify its deals with landlords, and apply for government relief.
“Management is confident that Cineplex will be able to address any liquidity issues arising from the impact of COVID-19 as it moves forward in the coming weeks and months,” the company said today, noting it can now move forward on plans “free of the restrictions that had been imposed on it by the terms of the agreement governing the [Cineworld] Transaction.”
On May 8, the Canadian company said Cineworld has advised that it remained “committed” to closing the deal — which had been struck in December 2019 — on or before June 30, but noted there “can be no assurance that the conditions to closing the transaction will be satisfied” by that date. One condition was that Cineplex’s debt does not exceed $725 million.
Cineworld said last week in announcing the deal was scotched that Cineplex had breached the deal terms and experienced an unspecified “material adverse effect” that caused the UK giant, which also owns U.S. chain Regal, to pull out.
Cineplex said Monday it “intends to commence legal proceedings promptly against Cineworld and seek damages for Cineworld’s breaches of the agreements governing the Transaction and its failure to discharge its obligations thereunder.”