Cineplex Announces Proposal to Amend its Convertible Debentures as Part of a Comprehensive Refinancing Plan
Comprehensive financing plan to optimize capital structure by extending maturities, improving financial flexibility, and reducing dilutive impact of convertible debentures
The comprehensive refinancing plan includes:
- repaying in full Cineplex's existing senior revolving credit facility (the "Credit Facility Repayment") and replacing it with a new
$100 million senior secured credit facility with a term of at least three years (the "New Credit Facility"); - conducting a private placement of new senior secured notes with a target size of
$550,000,000 and a term to maturity of at least five years (the "New Notes Offering"); - redeeming in full its existing 7.5% senior secured second lien notes due
February 26, 2026 (together with the Credit Facility Repayment, the "Repayments"); and - an amendment to effectuate the extension and partial redemption of its
$316.3 million of aggregate principal amount of Convertible Debentures (the "Convertible Debenture Amendments") to, amongst other things, extend the maturity fromSeptember 30, 2025 toMarch 1, 2030 , and reduce the principal amount outstanding by$100 million .
The proposed comprehensive refinancing plan will have three key benefits for the Company's capital structure: 1) meaningfully extend debt maturities, 2) reduce restrictions imposed by debt covenants, and 3) and reduce potential equity dilution from the Convertible Debentures.
As detailed below, holders of 61.2% of the Convertible Debentures have committed to support the Convertible Debenture Amendments.
"We remain confident in the long-term fundamentals of theatrical exhibition and all other businesses we operate. During 2023, Cineplex delivered strong year-over-year revenue growth of 26% and nearly tripled its adjusted EBITDAaL," said
"Last week we closed the sale of
Cineplex has called a meeting of the holders of the Convertible Debentures (the "Convertible Debentureholders") in order to consider certain amendments to the trust indenture dated
(a) |
a redemption, on a pro rata basis, of |
(b) |
an increase in the interest rate from 5.75% to 7.75% effective |
(c) |
a decrease in the conversion price from |
(d) |
an extension of the maturity date of the Convertible Debentures from |
(e) |
and the remaining Convertible Debentures not being redeemable prior to |
Completion of the Convertible Debenture Amendments is conditional upon the prior or contemporaneous completion of the New Notes Offering (sized to be no less than
The board of directors of Cineplex unanimously recommends that the Convertible Debentureholders vote FOR the proposed Convertible Debenture Amendments.
As of the date of this announcement, holders of 61.2% of the outstanding Convertible Debentures (the "Supporting Debentureholders") have signed consent agreements with Cineplex, pursuant to which such Supporting Debentureholders have consented to the Convertible Debenture Amendments and agreed to vote in favour of the Convertible Debenture Amendments at a meeting of Convertible Debentureholders to be held on
Cineplex will continue to seek additional written consents to support the Convertible Debenture Amendments. If Cineplex obtains written consents from the holders of at least 66 2/3% of the outstanding Convertible Debentures, Cineplex will have the requisite approval required under the Convertible Debenture Indenture to effect the Convertible Debenture Amendments by way of written consent, and the Debentureholder Meeting will be cancelled.
If approved, the Convertible Debenture Amendments would be made effective by a supplemental indenture entered into as of the closing date of the New Notes Offering. The pro rata redemption of
The record date for determining the Convertible Debentureholders entitled to receive notice of and vote at the Meeting is
The Convertible Debenture Amendments are subject to approval by the
As part of the broader proposed refinancing, Cineplex plans to pursue the New Note Offering, subject to market and other conditions. Cineplex plans to raise total gross proceeds of
It is proposed that Cineplex's existing senior credit facility will be repaid in full as part of the proposed refinancing plan. Cineplex intends to enter into the New Senior Credit Facility for
It is expected that the New Senior Credit Facility will have a covenant-lite structure, including no financial maintenance covenants provided that the utilization on the New Senior Credit Facility (including issued letters of credit) does not exceed an agreed upon threshold.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in
About Cineplex
Cineplex (TSX:CGX) is a top-tier Canadian brand that operates in the
Proudly recognized as having one of the country's Most Admired Corporate Cultures, Cineplex employs over 10,000 people in its offices and venues across
Caution Regarding Forward-Looking Statements:
Certain statements and/or information in this news release (identified by words such as "may", "will", "could", "should", "would", "suspect", "outlook", "believe", "plan", "anticipate", "estimate", "expect", "intend", "forecast", "objective" and "continue" (or the negative thereof)), and words and expressions of similar import, and similar expressions suggesting future events or future performance are intended to identify forward-looking statements. Such forward-looking statements and/or information is based on expectations and assumptions made by Cineplex and is subject to risks and uncertainties which may be beyond Cineplex's control. A comprehensive discussion of risks that may impact Cineplex can be found in Cineplex's public reports and filings, including those described in Cineplex's Annual Information Form for the year ended
*Adjusted EBITDAaL is a measures that does not have a standardized meaning under generally accepted accounting principles ("GAAP"). This measure as well as other Non-GAAP financial measures reported by Cineplex are defined in the 'Non-GAAP and Other Financial Measures' section at the end of a news release issued by Cineplex on the date hereof reporting its Fourth Quarter and Annual 2023 Results.
SOURCE Cineplex