Cineplex eyes possible merger with Cineworld U.S. unit: report
Canadian cinema chain Cineplex has approached bankrupt rival Cineworld's lenders for a potential merger with the British company's U.S. unit Regal Entertainment, the Wall Street Journal reported on Wednesday.
Cineplex has proposed taking over Regal, and would give Cineworld's lenders debt and stock backed by the combined entity, the newspaper said, citing people with knowledge of the talks who it didn't identify.
Cineworld and Cineplex have been locked in a multimillion-dollar legal battle since the London-listed company rescinded its offer to buy Toronto-based Cineplex more than two years ago, after COVID -19 hit the movie business, shuttering theatres and delaying blockbuster movie releases.
Cineworld has since been struggling to rein in massive debt and this month filed for bankruptcy in the United States.
Cineplex shares jumped 6.03 per cent to close at $9.32 in Toronto on the report. Cineworld shares jumped as much as 11 per cent in London trading on Wednesday and ended the day up 2.04 per cent to 2.75 pence. The shares have dropped more than 90 per cent this year.
Cineworld and Cineplex declined to comment on the report. Cineworld's restructuring adviser Alix Partners and financial adviser PJT Partners did not respond immediately to a Reuters request for comment.
The planned Cineplex takeover was abandoned in 2020, with Cineworld citing breaches in the merger agreement, prompting a $1.23-billion damages claim by the Canadian business.
Debt taken on by Cineworld to survive a pandemic-driven decline in footfall, along with previous loans to fund part of its Us$3.6-billion purchase of Regal in 2017 to create the world's second-largest movie theatre chain, left the British company struggling to stay afloat.
Cineworld's net debt, including lease liabilities of about $4 billion, stood at $8.9 billion at the end of 2021.