Cineplex employees work at a Cineplex in Toronto, on Tuesday, October 6, 2020. THE CANADIAN PRESS/Chris Young

Cineplex amends creditor agreement again in bid to reduce debt during COVID pandemic

TORONTO — Cineplex Inc. says it has once again amended its credit agreement with lenders as it struggles through the financial impact of the COVID-19 virus on its operations.

The country’s largest theatre chain says the third amendment allows for the suspension of financial covenant testing to continue until the fourth quarter under certain conditions.

These include the completion of a minimum $200-million financing of second lien secured notes by March 31.

Net proceeds must be used to repay debt, including $100 million that would be a permanent repayment.

Cineplex also says it entered into an “engagement letter” with BMO Capital Markets and Scotiabank for a proposed private placement offering of second lien secured notes following the release of its fourth-quarter results on Feb. 11.

Net proceeds from the notes offering would be to repay debt and add liquidity until the return of more normalized market conditions.

“With the vaccine rollout underway, our team is looking forward to reopening our circuit of theatres and entertainment venues across Canada and currently expecting to see a return to more normal operating conditions in the second quarter,” stated president and CEO Ellis Jacob.

“With the announcement today, we remain confident as ever in our strategy and financial outlook as well as the ability of the industry as a whole to not only recover, but thrive.”

Cineplex’s financial model has been pummelled since the start of the pandemic as provincial leaders closed movie theatres and Hollywood delayed the release of many anticipated blockbusters.

The Toronto-based company has already taken steps, including selling its Toronto headquarters for $57 million, to repay debt.

A separate $60-million agreement extended its Scene loyalty partnership with Scotiabank to offer new reward redemption options.

Cineplex’s share value has dropped nearly 70 per cent since the start of the pandemic, as a $2.8-billion takeover by London-based Cineworld fell apart, and the virus forced the company to lay off staff.

The shares traded for $11.25 on Monday, down from the 52-week high of $33.90 about a year ago.

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