Cineplex hopes moviegoers are ready to return to theaters as the company faces an uncertain future after the project that planned to sell it to Britain’s Cineworld failed.
“At this point, we are looking to stabilize the business and make sure everything is in order,” chief executive Ellis Jacob told The Canadian Press on Tuesday.
Cineplex shares fell 19% on Tuesday to $ 8.04 on the Toronto Stock Exchange after the company warned of its ability to “continue to operate” when it released deferred quarterly results.
Cineplex has reached an agreement with its lenders, who will provide it with some financial assistance due to the COVID-19 pandemic that forced the company to close its cinemas in March.
The agreement can be extended to the second and third quarters of 2020, but to do so, the company must obtain a minimum of $ 250 million in new financing.
In financial documents released Monday evening, Cineplex warned that the uncertainties it faced “cast serious doubt on the ability of the business to continue operating.”
“Although Cineplex currently has sufficient liquidity to meet its immediate financial obligations, there can be no assurance that management actions will provide sufficient short-term liquidity to discharge its ongoing obligations, and it cannot be guarantee that it will be able to obtain additional financing on favorable terms, if at all, “said the company.
The warning comes as the Toronto-based company prepares to open certain theaters in British Columbia, Saskatchewan, Quebec, New Brunswick, Nova Scotia and Newfoundland and Labrador on Friday.
The company resumed hosting customers at its Rec Room play and dining complexes in Winnipeg, Calgary and Edmonton during the week of June 15, and reopened six cinemas in Alberta on June 26.
“We are optimistic, but these are small steps because we have to be careful,” said Jacob.
Film buffs returning to the cinema will have a different experience than the one they left in March. To keep guests at a distance, reserved seats will be deployed in each auditorium, which will benefit from additional cleaning.
Some moviegoers will be wearing masks. Cineplex will not make them mandatory, but will distribute them and encourage their use.
Food counters, once a major source of income for Cineplex, will only offer popcorn and a few other items – those that require more complicated cooking will not be available at this time.
Cineplex also has to adjust to the failure of its takeover of Cineworld for $ 2.8 billion. Cineworld claims to have renounced the agreement because Cineplex breached the contract, while Cineplex has committed to sue Cineworld.
Mr. Jacob has not ruled out another deal to sell Cineplex. “You have to look at all the options that are there,” he said.
Heavy loss in the 1st quarter
Cineplex said on Monday that the pandemic had a “significant negative effect” on its business and resulted in a loss of $ 178 million for its first quarter.
The company lost $ 2.82 per share for the quarter ended March 31, compared to a loss of $ 7.36 million, or 12 cents per share, for the same period a year earlier.
Cineplex revenues retreated to $ 282.8 million compared to $ 364.6 million in the first quarter of last year, while visitor numbers fell from nearly 15 million last year to 10 .7 million for the first three months of 2020.
Cineplex also abandoned its dividend and cautioned that it should not be expected to return in the near future.
Jacob says he heard moviegoers were tired of watching movies at home and wanted to see something new, but he can only offer to screen what distributors and studios will allow him to do. His main focus is therefore on efforts to gain consumer confidence and convince them that it is safe to return to the movies.
“We have to make the guests comfortable and we have to bring them back to our environment, and then we will look at the opportunities as we move forward. We need to put this fear of COVID behind us, ”said Mr. Jacob.