Cineplex looks to lure audiences back after collapse of Cineworld deal

Cineplex looks to lure audiences back after collapse of Cineworld deal

TORONTO — Cineplex is hoping moviegoers are willing to return to its theatres as the company deals with an uncertain future in the wake of its failed plan to sell itself to Cineworld.

“At this point we’re looking to stabilize the company and get everything in the right place,” chief executive Ellis Jacob told The Canadian Press on Tuesday.

Cineplex shares were down more than 17 per cent to $8.23 on the Toronto Stock Exchange after the company warned about its ability to “continue as a going concern” in its release of delayed quarterly results.

Cineplex reached a deal with its lenders to provide some financial relief due to the COVID-19 pandemic which forced the company to close its theatres in March.

The agreement can be extended to the second and third quarters of 2020, but to do that the company needs to secure a minimum of $250 million in new financing.

In financial documents released Monday evening, Cineplex warned that the uncertainties it has faced “lend significant doubt about the company’s ability to continue as a going concern.”

“While Cineplex currently has sufficient liquidity to satisfy its immediate financial obligations, there can be no assurance that the steps that management is taking will provide sufficient liquidity in the near term to meet its ongoing obligations, nor can it be assured that it will be able to obtain additional financing at favorable terms, or at all,” the company said.

The warning came as Cineplex is set to reopen some theatres in British Columbia, Saskatchewan, Quebec, New Brunswick, Nova Scotia and Newfoundland on Friday.

The company welcomed back customers to its Rec Room gaming and food complexes in Winnipeg, Calgary and Edmonton during the week of June 15 and reopened six theatres in Alberta on June 26.

“We’re optimistic, but it’s baby steps because we have to be careful,” Jacob said.

Moviegoers heading back to theatres are in for an experience unlike the one they left in March. To keep guests distanced, reserved seats will be rolled out in every auditorium, which will get additional cleanings.

Some moviegoers will be clad in masks. Cineplex won’t make them mandatory, but will hand them out and encourage their use.

Concession stands — once a big money-maker for Cineplex — will be pared back to popcorn and a few other favourites, with some of the items that require more intense cooking taking a temporary hiatus.

The changes come amid the aftermath of Cineworld PLC’s abortive $2.8-billion takeover deal to buy Cineplex. Cineworld claims it walked away from the deal after Cineplex breached the contract, while Cineplex has vowed to sue.

Jacob has not ruled out another deal to sell Cineplex. “One has to look at all the options that come forward,” he said.

Cineplex lost $178.4 million or $2.82 per diluted share for the three months ended March 31, compared with a loss of 12 cents per share or $7.36 million a year earlier.

Revenue tumbled to $282.8 million from $364.6 million, while attendance plunged to 10.7 million from nearly 15 million.

Cineplex also scrapped its dividend and warned it wouldn’t expect one to return in the near future.

Jacob says he has heard that moviegoers are tired of watching films at home and want new releases, but he’s tied to screening what distributors and studios will allow, so he’s focused most on rebuilding consumer confidence and convincing people that it’s safe to head to the theatre again.

“I’d rather see an auditorium full of people than people watching at home,” Jacob said.

“We need to get the guests comfortable and we need to bring them back to our environment and then we will look at the opportunities as we move forward. We have to put this COVID fear behind us.”

This report by The Canadian Press was first published June 30, 2020.

Companies in this story: (TSX:CGX)

Tara Deschamps, The Canadian Press

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Comments are closed

Just Posted

COVID-19: Red Deer at three active cases of central zone’s four

Alberta confirmed 130 new COVID-19 cases Monday, including three in the City… Continue reading

Red Deer’s crime map to continue beyond a one-year pilot project

There’s been nothing but good public feedback, says city manager

Red Deer city council is open to allowing office space in Edgar Industrial Park site

Coun. Frank Wong unsuccessfully argued the downtown will suffer

Canada gains from Australia-China barley feud

Red Deer area a prime spot for growing barley

QUIZ: A celebration of dogs

These are the dog days of summer. How much do you know about dogs?

David Marsden: Leave the financial stimulus to private industry

So, you’ve heard the announcement about the economic stimulus that is much… Continue reading

Scientists urge WHO to acknowledge virus can spread in air

Scientists urge WHO to acknowledge virus can spread in air

Can Flushing the Toilet Spread the Virus?

Can Flushing the Toilet Spread the Virus?

After prior rejections, Alberta announces sandhill crane hunt for this fall

After prior rejections, Alberta announces sandhill crane hunt for this fall

Spring Training 2.0: Jays begin camp in Toronto ahead of 60-game season

Spring Training 2.0: Jays begin camp in Toronto ahead of 60-game season

Nationals, Astros cancel workouts over virus testing delays

Nationals, Astros cancel workouts over virus testing delays

Bryson DeChambeau wins Rocket Mortgage Classic by 3 shots

Bryson DeChambeau wins Rocket Mortgage Classic by 3 shots

PGA Tour, Memorial scrap plans to have limited spectators

PGA Tour, Memorial scrap plans to have limited spectators

Most Read