TORONTO, June 15, 2020 /CNW/ - (TSX: CGX) – Cineplex
Inc. ("Cineplex") today announced details of its plans to move its
business forward following the abandonment by Cineworld Group plc
("Cineworld") of its acquisition of Cineplex (the
"Transaction"). Cineworld's decision to abandon the
Transaction was a scenario that Cineplex had considered and planned
for. 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.
Theatre Reopening Plans
It has been three months since Cineplex temporarily closed its
network of theatres and entertainment venues in light of COVID-19
and government-imposed restrictions. During this time,
Cineplex has been diligently preparing for their safe reopening
with the health and safety of its employees and guests being its
top priority. Cineplex has carefully reexamined all of its
buildings and processes, so that when its theatres and
entertainment venues reopen, it will have implemented an
industry-leading program with end-to-end health and safety
protocols. At Cineplex's theatres specifically, it will also
be launching reserved seating in all auditoriums across the country
to ensure proper physical distancing between its guests.
Cineplex is pleased to see provincial governments begin to
loosen restrictions on social gatherings, which will enable it to
resume measured operations at its locations of The Rec Room this
week in Winnipeg, Calgary and Edmonton. Cineplex is also working towards
reopening six theatres in Alberta
on June 26, 2020. In all markets
where Cineplex is permitted by government and health authorities,
it plans to reopen as many of its locations as it can on
July 3, 2020 (or as soon thereafter
as permitted by law).
Cineplex has been able to maintain connections with its guests
during the period of theatre and venue closures through its online
Cineplex Store, as well as the SCENE loyalty program and food
offerings delivered via Uber Eats and Skip the Dishes. The
company will use these communication channels to ensure that its
guests are aware when theatres and other venues are reopened, and
the various measures put in place to ensure their safety while
enjoying a long-deserved outing.
Financial Stability
To mitigate the negative impact of COVID-19 on its business and
financial position, Cineplex has undertaken a variety of measures
to support long-term stability including:
- Temporary layoffs of all part-time and full-time hourly
employees
- Reducing full-time employee salaries
- Suspending or deferring current capital spending and reviewing
all capital projects to consider either deferral or
cancellation
- Reducing non-essential discretionary operational expenditures
(such as spending on marketing, travel and entertainment)
- Implementing a more stringent review and approval process for
all outgoing procurement and payment requests
- Proactively negotiating with landlords for rent relief
- Working with major suppliers and other business partners to
modify the timing and quantum of certain contractual payments
- Reviewing and applying for government subsidy programs where
available, including the Canada
Emergency Wage Subsidy
- Continuing the suspension of dividend
- Focusing on revenue driving opportunities including the
expansion of Cineplex Store offerings and expansion of food home
delivery from theatres and location-based entertainment venues
Cineplex has developed plans to position itself for long-term
financial stability and business success which it can now advance
free of the restrictions that had been imposed on it by the terms
of the agreement governing the Transaction. 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.
Due to the uncertainty of the timing of the reductions of
government-imposed restrictions and the potential long-term effects
that COVID-19 may have on the exhibition and amusement and leisure
businesses, COVID-19 is expected to have a prolonged negative
impact on Cineplex's operations. With the unknown duration of
the pandemic and yet to be determined timing of the phased
reopening of Cineplex's businesses, as well as consumers' future
risk tolerance regarding health matters, it is not possible to
precisely estimate the impact on future results. However, Cineplex
is optimistic that the industry will recover over time as consumer
demand for the theatrical experience combined with a build-up of
anticipated releases of strong film content will help drive
visitation as people look to return to normalcy.
Legal Proceedings Against Cineworld
In addition to the measures described in this news release,
Cineplex 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.
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," "hope,", "optimistic," "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 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; the outcome of any litigation
surrounding the termination of the Transaction; 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