Cinemark Furloughs Half of Corporate Staff, Lays Off 17,500 Hourly Workers

Courtesy of Business Wire

The cinema chain revealed the cost cuts as part of a new $250 million debt issue memorandum.

Cinemark has become the latest exhibition chain to lay off or furlough employees to cut costs amid theater closures caused by coronavirus pandemic restrictions.

In an SEC filing Tuesday that follows a $250 million debt offering, parent Cinemark Holdings revealed it had laid off over 17,500 domestic hourly theater employees. The chain has also furloughed 50 percent of its headquarters corporate employees at 20 percent of salary, and with full benefits. Cinemark has reduced the salaries of its remaining employees by half.

"The COVID-19 pandemic has had and may continue to have adverse effects on our business, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness, some of which may be significant," Cinemark added in a section on risk factors surrounding its new debt offering memorandum.

The chain also said it will suspend its dividend payment, which runs to around $42 million per financial quarter. Cinemark on Monday said it has launched a private offering for $250 million in senior secured notes due in 2025.

Cinemark added it intends to use the proceeds of the debt offering "for general corporate purposes, including further increasing its liquidity." Cinemark, the third-largest domestic cinema chain, on March 16 announced temporary theater closures at all of its 345 sites amid the COVID-19 crisis. That was followed by rival cinemas across the U.S. also going dark as a health and safety precaution.