Cineplex Inc. (TSX:CGX), Canada’s dominant chain of movie theaters, reported a loss of $178 million for the quarter ended March 31. Cineplex said the loss included a write down of $173 million on property and other assets and acknowledged that the business will take a long time to recover from the COVID-19 pandemic.
The Toronto-based company also said it has struck a deal with lenders for $250 million in new financing as it deals with an uncertain future. Cineplex said some of the new money it’s borrowing must be used to repay existing debt. The company shut all of its theatres on March 16 and most remain closed, though it plans to open some outlets in six provinces starting on July 3.
Cineplex is also reeling following a failed takeover. London-based Cineworld Group Plc, the world’s second-largest cinema group, agreed last year to take over Cineplex for $2.15 billion but scrapped the deal on June 12, alleging the Canadian company breached the terms of the agreement. Cineplex denied the claims and says it will file suit against Cineworld.
Both companies have seen their revenues crushed by the pandemic, with movie theaters across the world forced to close temporarily to slow the spread of the virus. Cineplex’s market value has plunged to about $628 million, down from $2.1 billion in February of this year. Since the beginning of the outbreak, the company laid off staff and suspended dividends.
Cineplex shares closed Monday at $9.92. The Cineworld takeover offer was for $34 a share.
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