Cineplex is weighing a possible merger with Cineworld’s U.S. theatre chain Regal Entertainment Group, according to a report from The Wall Street Journal, though those plans may be impacted by a court ruling putting an appeals process on hold.
The Canadian company has allegedly approached U.K.-based Cineworld investors about a potential takeover of the U.S-based division, giving them back debt and stock as part of the merger. The Wall Street Journal attributed the report to “people familiar with the matter.”
Spokespeople for Cineworld and Cineplex declined to comment on the report.
Cineplex previously stated it would explore “all avenues” to advance its claim against Cineworld after winning a court dispute over the failed $2.8 billion merger between the two companies. Cineplex had been awarded $1.24 billion in damages by the Ontario Superior Court of Justice in late 2021 after Cineworld terminated its planned takeover of the company. Cineworld filed an appeal in January, with Cineplex filing a cross-appeal shortly after.
However, Cineworld filed for bankruptcy with the U.S. Bankruptcy Court for the Southern District of Texas earlier this month in an effort to “significantly reduce” its debt, with an estimated $1.94 USD billion owed to lenders. Cineplex sought an order to modify the stay of proceedings following Cineworld’s Chapter 11 filing in the U.S. court, so it could continue with the appeals process.
The latest development came this week as United States Bankruptcy Court for the Southern District of Texas has held up Cineworld’s automatic stay proceedings against Cineplex’s claim. As a result, the scheduled Oct. 12 and 13 hearings at the Ontario Court of Appeal will no longer take place, according to a Cineplex statement to investors on Wednesday (Sept. 28).
“The stay of proceedings in the Cineworld bankruptcy proceedings does not impact the merits or quantum of Cineplex’s claim, and Cineplex continues to have its claim against Cineworld,” read the statement, continuing that it is “not possible for Cineplex to predict the timing or final outcome of Cineplex’s judgment against Cineworld, or whether Cineworld will have the ability to satisfy Cineplex’s claim” and it “will continue to explore all avenues and forms of consideration to satisfy its judgment.”
Cineplex has stated that even if Cineworld loses the appeal, the company may not be able to “satisfy the full amount of any damages or costs awarded.”
In its most recent quarter, Cineplex showed signs of a strong recovery from the pandemic. While still down compared to 2019 figures, the company’s revenue has grown by $472 million through the first half of its fiscal year. That includes a $22.6 million boost in in-theatre and pre-show ads as audiences have returned to theatres, as well as $838,000 more in its digital signage network.
A version of this story previously appeared on Playback.
