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Cineplex asks Cineworld lenders to consider U.S. merger, WSJ says

Sept. 28, 2022 Updated Wed., Sept. 28, 2022 at 4:51 p.m.

A customer buys concessions inside a Cineplex Cinemas movie theater in Toronto in February 2020.   (Cole Burston/Bloomberg)
A customer buys concessions inside a Cineplex Cinemas movie theater in Toronto in February 2020.  (Cole Burston/Bloomberg)
By Thomas Seal Bloomberg

Canadian theater chain Cineplex has weighed a merger with Cineworld Group’s U.S. arm, and has discussed a potential deal with the U.K. company’s lenders, the Wall Street Journal reported.

Cineplex has proposed taking over Regal Entertainment Group, and would give Cineworld’s lenders debt and stock backed by the combined entity, the newspaper said Wednesday, citing people with knowledge of the talks who it didn’t identify.

Cineworld still has the right to make its own restructuring offer to creditors before other alternatives can be proposed, the report added.

Cineworld pulled out of a deal to acquire Cineplex in June 2020 after COVID-19 hit the movie business, shuttering theaters and delaying blockbuster movie releases. Cineplex sued Cineworld for breach of deal terms and a Canadian court has ordered the world’s second-largest cinema chain to pay almost $1 billion in damages. Cineworld’s appeal and Cineplex’s cross-appeal hearings to that judgment are scheduled for next month.

Cineworld filed for bankruptcy in Texas earlier this month after racking up $5 billion in debt. It assessed mergers and other strategic options, including a secondary US listing and selling non-U.S. assets, before the Chapter 11 filing, Deputy Chief Executive Officer Israel Greidinger said in court documents.

A representative for Cineworld declined to comment when contacted by Bloomberg. A spokesperson for Cineplex didn’t respond to a request for comment outside of ordinary business hours. The Canadian company declined to comment to the Journal.

Cineworld shares jumped as much as 11% in London trading on Wednesday and were down 5.9% to 2.54 pence at 11:09 a.m. The shares have dropped more than 90% this year.

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