Cineplex Sells $250 Million Of Unrated Bonds

Canadian movie theatre chain Cineplex (TSX:CGX) successfully sold $250 million of unrated bonds to investors wanting to play the economic recovery trade.

Canada’s largest chain of movie theaters priced the second-lien secured senior bonds that are due in 2026 to yield 7.5%. That compares with an earlier guidance between 7.5% and 7.75%. The transaction comes as investors worldwide are positioning for a post-pandemic reopening as countries execute COVID-19 vaccination campaigns.

Investors piled into the deal even though Canada has an additional layer of uncertainty because its vaccination effort is lagging most key Western economies. Cineplex bookrunners garnered orders for around five times the deal’s size and 51 buyers took part in the transaction. The arrangers have gathered around $1 billion in preliminary indications of interest.

Earlier this month, Cineplex said it was planning to raise a minimum $200 million by selling bonds by the end of March to meet conditions for a covenant waiver agreed to with its existing lenders.

Even as Cineplex has continued to burn through cash in recent months amid more lockdowns, the stock rose by as much as 12% to $13.56 last week, the highest increase since June of last year. Its convertible bonds first issued at par in July have rallied to trade at around 135 Canadian cents on the dollar, according to data compiled by Bloomberg Markets.