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This is an interesting turn-about. The damage award exceeds the combined value of both companies.
I wonder if Cineplex will end up owning Cineworld instead of it being the other way around.
https://financialpost.com/fp-finance...nadian-damages
I wonder if Cineplex will end up owning Cineworld instead of it being the other way around.
https://financialpost.com/fp-finance...nadian-damages
Cineworld Group Plc plunged as much as 40 per cent after a court ordered the world’s second-largest cinema chain to pay US$1 billion in damages — more than its entire market value — over an aborted takeover bid.
A Canadian court ordered the British company to pay the money on Tuesday after it scrapped a plan to buy Toronto-based Cineplex Inc. as the pandemic forced entertainment venues to close. The US$1.6-billion deal would have made Cineworld North America’s largest movie-theatre operator.
Cineworld’s market value has shrunk by about 90 per cent in the past two years, and now stands at 452 million pounds (US$599 million) after an acquisition spree and COVID-mandated theatre closures swelled its debt burden to about US$5 billion.
The company will appeal the decision and does not expect to have to pay damages during this process, which a spokesman said could take up to a year. Investors will be focused on whether the appeal is successful, and if in the meantime the company can balance uncertain box office income with the need to finance its US$5-billion debt load.
“Make no two ways about it, this is dire news for Cineworld,” said Berenberg analyst Owen Shirley in a note to clients. “This has the scope to wipe out all the remaining equity in the business.”
The company has been among the most preferred targets for bearish investors in the U.K. with a short interest of about 15 per cent. Wednesday’s drop could have led to a paper profit of about 37 million pounds for short sellers.
New Holland Capital, Whitebox Advisors and K2 & Associates Investment Management were among seven investment firms with disclosed short bets against the company, according to data compiled by the Financial Conduct Authority.
Cineworld had US$650 million of liquidity at the end of the first financial half of the year, said Jefferies analyst James Wheatcroft. The company is rated CCC by S&P Global Ratings.
As for Cineplex, Canadian theatres have reopened and the country has vaccinated about 80 per cent of the eligible population, but it’s still struggling to attract moviegoers to its 161 locations. It reported 8.3 million theatre customers in the third quarter, fewer than half the number it saw in the same period of 2019.
Cineplex shares are 65 per cent below the $34 a share that Cineworld offered in the now-broken deal.
“We are pleased that the court found Cineplex acted properly throughout this difficult period in our history,” Chief Executive Officer Ellis Jacob said in a statement. The court also denied Cineworld’s counterclaim, Cineplex said.
A Canadian court ordered the British company to pay the money on Tuesday after it scrapped a plan to buy Toronto-based Cineplex Inc. as the pandemic forced entertainment venues to close. The US$1.6-billion deal would have made Cineworld North America’s largest movie-theatre operator.
Cineworld’s market value has shrunk by about 90 per cent in the past two years, and now stands at 452 million pounds (US$599 million) after an acquisition spree and COVID-mandated theatre closures swelled its debt burden to about US$5 billion.
The company will appeal the decision and does not expect to have to pay damages during this process, which a spokesman said could take up to a year. Investors will be focused on whether the appeal is successful, and if in the meantime the company can balance uncertain box office income with the need to finance its US$5-billion debt load.
“Make no two ways about it, this is dire news for Cineworld,” said Berenberg analyst Owen Shirley in a note to clients. “This has the scope to wipe out all the remaining equity in the business.”
The company has been among the most preferred targets for bearish investors in the U.K. with a short interest of about 15 per cent. Wednesday’s drop could have led to a paper profit of about 37 million pounds for short sellers.
New Holland Capital, Whitebox Advisors and K2 & Associates Investment Management were among seven investment firms with disclosed short bets against the company, according to data compiled by the Financial Conduct Authority.
Cineworld had US$650 million of liquidity at the end of the first financial half of the year, said Jefferies analyst James Wheatcroft. The company is rated CCC by S&P Global Ratings.
As for Cineplex, Canadian theatres have reopened and the country has vaccinated about 80 per cent of the eligible population, but it’s still struggling to attract moviegoers to its 161 locations. It reported 8.3 million theatre customers in the third quarter, fewer than half the number it saw in the same period of 2019.
Cineplex shares are 65 per cent below the $34 a share that Cineworld offered in the now-broken deal.
“We are pleased that the court found Cineplex acted properly throughout this difficult period in our history,” Chief Executive Officer Ellis Jacob said in a statement. The court also denied Cineworld’s counterclaim, Cineplex said.