Cineplex gets relief from lenders as revenue falls 85% in Q3

Cineplex Inc. reached an agreement with lenders for relief on its covenants to the second quarter of 2021 after the movie theatre chain saw revenue plummet due to capacity restrictions in cinemas.

The Toronto-based company announced third-quarter results that missed analysts' expectations.

Revenue declined 85 per cent, to $61 million from $418.4 million a year ago. Analysts were looking for $65.8 million.

Key insights:

❚ The company is trying to slow the rate at which it uses cash. It burned about $16.6 million in cash per month in Q3 and has been burning $15 million to $20 million a month since the onset of the pandemic.

❚ Cineplex gradually reopened theatres over the summer at limited capacity, but had to temporarily shut them again in parts of Canada in October after a second wave of COVID-19 hit. Attendance at theatres fell 91 per cent in the third quarter.

❚ It will not reopen its locations in Toronto, Ottawa and Peel region anytime soon even if restrictions are relaxed due to concerns “from a financial perspective,” spokesperson Sarah Van Lange said earlier.

❚ Like other chains, Cineplex is being hurt by the delay of several big-budget films. Last month, Metro-Goldwynpushed back the release of the latest James Bond flick No Time To Die starring Daniel Craig to April, sending shares down to a record low.

Bloomberg previously reported that the last big film of 2020, Wonder Woman 1984, might stream on HBO MAX only a week or two after a theatrical release.

“We haven't discussed that with our studio partners,” chief executive Ellis Jacob said. “I'm not aware of them moving in that direction.”