Cineplex Raises $90.6 Million in Fresh Cash With Property, Loyalty Program Deals

Scotiabank Theatre Toronto - Cineplex Entertainment - Publicity -H 2016
Courtesy of Cineplex Entertainment

The embattled exhibitor will use half of the proceeds to repay debt after receiving relief from its lenders amid the pandemic.

Canadian exhibitor Cineplex has raised CAN$117 million (US$90.6 million) in fresh cash to help repay debt by selling its Toronto headquarters and leasing it back and expanding its customer loyalty program.

Cineplex, which received relief from its lenders after its box office revenues collapsed amid the pandemic, unveiled a sale and leaseback of its office buildings for gross proceeds of CAN$57 million (US$44 million). The Canadian exhibition giant raised another CAN$60 million (US$46.5 million) via a separate agreement with lead sponsor Scotiabank to expand a Scenes-branded customer loyalty program.

Cineplex said around half of the proceeds from both transactions will be used to permanently pay down its existing credit facilities.

"We are confident in our response to COVID-19 and the actions we have taken to stabilize our financial position," Ellis Jacob, president and CEO of Cineplex, said in a statement on Tuesday. In November, Cineplex said its creditors struck an agreement to extend covenant relief by six months to the second quarter of 2021.

As of Sept. 30., Cineplex had US$350 million in outstanding debt on its balance sheet and a monthly cash burn rate at around US$15 million to remain in operation. The company is relying on property and other asset sales, a federal tax refund and theater rent forgiveness by landlords to help cut operating costs into 2021.

Cineplex is banking on the promise of a vaccine being distributed in mid-2021 as a possible pandemic cure to help bring customers back to the multiplex. "With vaccine rollout plans being finalized, an impressive movie slate for 2021 and pent-up demand from our guests for safe social experiences, we are confident about what’s ahead for the company in 2021 and onwards," Jacob said.

Cineplex's 2020 fortunes also took a hit when Regal owner Cineworld Group withdrew a planned $2.1 billion takeover of the Canadian exhibitor, which would have created one of the world's largest cinema companies with more than 11,200 screens globally.