TORONTO, July 3, 2020 /CNW/ - Cineplex Inc.
("Cineplex") (TSX: CGX) announces that it has commenced an action
in the Ontario Superior Court of Justice against Cineworld Group
plc and 1232743 B.C. Ltd.
(collectively, "Cineworld"), seeking damages after Cineworld
wrongfully repudiated the transaction to acquire Cineplex at a
price of $34 per share (the
"Arrangement").
Cineplex's statement of claim was issued by the Ontario court and was served on Cineworld
today. The claim seeks damages, including the approximately
$2.18 billion that Cineworld would
have paid upon the closing of the Arrangement for Cineplex's
securities, reduced by the value of the Cineplex securities
retained by its securityholders, as well as compensation for other
losses, including the failure of Cineworld to repay or refinance
Cineplex's approximately $664 million
in debt and transaction expenses. Cineplex has also advanced
alternative claims for damages for the loss of benefits to its
securityholders, and to require Cineworld to disgorge the benefits
it improperly received by wrongfully repudiating the
Arrangement.
Cineplex claims that Cineworld breached its contractual
obligations and its duty of good faith and honesty in contractual
performance. Cineworld purports to rely upon alleged adverse
impacts of COVID-19 on Cineplex's business to terminate the
Arrangement, which it is not entitled to do. The contractual
agreements between the parties expressly exclude outbreaks of
illness, such as the COVID-19 pandemic, as a circumstance entitling
Cineworld to terminate the Arrangement. Without any legal
right to avoid its contractual obligations, Cineworld intentionally
chose to breach its obligations, including its obligation to seek
timely regulatory approval for the Arrangement under the Investment
Canada Act. On June 12, 2020,
Cineworld purported to terminate Arrangement and unilaterally
withdrew the request for Investment Canada Act approval.
Cineworld's actions to prevent the Arrangement from closing in
light of the COVID-19 pandemic is nothing more than a case of
buyer's remorse. While Cineplex honoured all of its
obligations under the Arrangement, Cineworld did not.
Due to uncertainties inherent in litigation, it is not possible
for Cineplex to predict the timing or final outcome of the legal
proceedings against Cineworld or to determine the amount of
damages, if any, that may be awarded.
Caution Regarding Forward-Looking Statements
Certain information included in this news release contains
forward-looking statements within the meaning of applicable
securities laws. These forward-looking statements include,
among others, statements with respect to Cineplex's objectives,
goals and strategies to achieve those objectives and goals, as well
as statements with respect to Cineplex's beliefs, plans,
objectives, expectations, anticipations, estimates and
intentions. The words "may", "will", "could", "should",
"would", "suspect", "outlook", "believe", "plan", "anticipate",
"estimate", "expect", "intend", "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 involve
inherent risks and uncertainties, including those described in
Cineplex's Annual Information Form ("AIF"), its MD&A for the
year ended December 31, 2019 and for
the first quarter ended March 31,
2020 (collectively, the "MD&A"). Those risks and
uncertainties, both general and specific, give rise to the
possibility that predictions, forecasts, projections and other
forward-looking statements will not be achieved. Certain material
factors or assumptions are applied in making forward-looking
statements and actual results may differ materially from those
expressed or implied in such statements. Cineplex cautions readers
not to place undue reliance on these statements, as a number of
important factors, many of which are beyond Cineplex's control,
could cause actual results to differ materially from the beliefs,
plans, objectives, expectations, anticipations, estimates and
intentions expressed in such forward-looking statements. These
factors include, but are not limited to, the duration and impact of
the COVID-19 pandemic on Cineplex, the movie exhibition industry
and the economy in general, as well as Cineplex's response to the
COVID-19 pandemic as it relates to the closure of its theatres and
location-based entertainment venues, employee reductions and other
cost-cutting initiatives, and increased expenses relating to safety
measures taken at its facilities to protect the health and
well-being of customers and employees; Cineplex's expectations with
respect to liquidity and capital expenditures, including its
ability to meet its ongoing capital, operating and other
obligations, and anticipated needs for, and sources of, funds;
Cineplex's ability to execute cost-cutting and revenue enhancement
initiatives in response to the COVID-19 pandemic; and risks
generally encountered in the relevant industry, competition,
customer, legal, taxation and accounting matters; the outcome of
any litigation surrounding the termination of the Cineworld
transaction; and diversion of management time on litigation related
to the Cineworld transaction.
The foregoing list of factors that may affect future results is
not exhaustive. When reviewing Cineplex's forward-looking
statements, readers should carefully consider the foregoing factors
and other uncertainties and potential events. Additional
information about factors that may cause actual results to differ
materially from expectations and about material factors or
assumptions applied in making forward-looking statements may be
found in the "Risks and Uncertainties" section of Cineplex's
MD&A.
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. Additionally, we undertake no obligation
to comment on analyses, expectations or statements made by third
parties in respect of Cineplex, its financial or operating results
or its securities. All forward-looking statements in this news
release are made as of the date hereof and are qualified by these
cautionary statements. Additional information, including Cineplex's
AIF and MD&A, can be found on SEDAR at www.sedar.com.
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. As a leading
entertainment and media company, Cineplex welcomes millions of
guests annually through its circuit of theatres and location-based
entertainment ("LBE") 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 "CDM")
and amusement solutions (Player One Amusement Group "P1AG").
Additionally, Cineplex operates an LBE business through
Canada's newest destinations for
'Eats & Entertainment' (The Rec Room), and entertainment
complexes specifically designed for teens and families (Playdium).
Cineplex is a joint venture partner in SCENE, Canada's largest entertainment loyalty
program.
Proudly recognized as having one of the country's Most Admired
Corporate Cultures, Cineplex employs approximately 13,000 people in
its offices across Canada and
the United States. To learn more
visit Cineplex.com or download the Cineplex App.
SOURCE Cineplex