After market close on Monday (June 29) Cineplex made its first financial filing since the collapse of its proposed $2.8-billion takeover by the U.K.’s Cineworld group. The filing covered the period ended March 31, but the release had been delayed in May.
For Q1, total revenues fell by 22.4% to $282.8 million, from $364.6 million the year prior, with Cineplex reporting $178.4 million in losses. Cineplex said the loss included a writedown of $173 million on property and other assets.
Box-office revenues for Q1, which only reflects around two weeks of theatre closures due to onset of the COVID-19 pandemic, fell 29% to $111 million, from $156.5 million in Q1 of the prior year. (Cineplex noted that prior to theatre closures on March 16, Cineplex revenues were up 6% compared to the prior year due to strong performances from titles such as 1917, Star Wars: The Rise Of Skywalker and Jumanji: The Next Level.)
Media revenues decreased by 7.3% to $32.5 million, compared with $35 million a year ago.
It also has not produced an issue of its Cineplex Magazine since March. It did note a “substantial growth” in terms of users and activity on its digital Cineplex Store, with a 37% increase in total registered users, a 107% increase in device activation and a 43% increase in the number of quarterly active users. However, it has not specified the total revenue (or increase in revenue) from the Cineplex Store in Q1.
Cineplex said it entered into an amendment agreement with its lenders on June 29, through which it will gain access to $250 million in additional financing as it grapples with an uncertain future in the midst of the COVID-19 pandemic. A portion of that $250 million be used to “make certain mandatory permanent repayments of the existing indebtedness.”
Cineplex also said it will explore additional financing options, including the sale of assets, as it looks to meet its debt obligation. As of March 31, the company had $665 million on long-term debt. On its June 30 conference call, Cineplex execs said assets that could potentially be sold could include real estate that is no longer required, equity investments it has accumulated over time, or specific business units.
Elsewhere, Cineplex reiterated that it believes Cineworld had no legal basis to terminate the transaction and expects to file its statement of claim in Ontario court within the next 10 days.
Under the terms of the now-cancelled Cineworld transaction, the U.K.-headquartered company had agreed to acquire all of the issued and outstanding common shares of Cineplex for $34 per share in cash. Following the closure of theatres across North America, including all 164 of Cineplex’s venues across Canada, Cineplex’s share price plunged to around $9 per share in March. At press time, the Canadian exhibitor was trading at around $9.92 per share.
As COVID-19-related restrictions have started to loosen across the country, Cineplex opened six theatre venues in Alberta on June 26 and plans to open select theatres across British Columbia, Saskatchewan, Quebec, New Brunswick, Nova Scotia and Newfoundland on July 3. An opening date for Ontario has not been outlined at press time.
“As of today, we are in the early days of our reopening process. While it is impossible to predict how long this crisis will last and how significant the impact will be on our business, we know guests miss the magic of the big screen and sound, and have a new appreciation for shared experiences with friends and family that can’t be replicated at home,” Cineplex CEO Ellis Jacob said in a statement.
Elsewhere, Cineplex announced the appointment of Phyllis Yaffe to its board of directors. Yaffe, who previously served on the Cineplex board from 2008 to 2016, was Canada’s Consul General in New York from September 2016 to December 2019. Yaffe will return to the role of board chair, replacing Ian Greenberg, who was chair from 2016.
