Cineplex Announces Credit Facility Amendment
TORONTO, March 28, 2023 /CNW/ - (TSX: CGX) – Today, Cineplex Inc. ("Cineplex" or the "Company") entered into a seventh amendment (the "Seventh Amendment") to the seventh amended and restated credit agreement with its lenders (as amended, the "Credit Agreement"). The Seventh Amendment revises certain of the financial covenants throughout the remainder of 2023. A copy of the Seventh Amendment will be filed under the Company's profile on SEDAR at www.sedar.com.
The following is a summary of the key terms of the Seventh Amendment (all capitalized terms below are as defined in the Seventh Amendment):
The financial covenant testing of the Total Leverage Ratio is amended as follows:
Commencing in Q1 2023 through to and including Q3 2023 testing is suspended;
Q4 2023 is amended to 3.25x; and
Thereafter, the Total Leverage Ratio covenant is unchanged at 3.00x.
The financial covenant testing of the Senior Leverage Ratio is amended as follows:
Q1 2023 is amended to 3.25x;
Q2 2023 is amended to 2.75x;
Q3 2023 is amended to 2.50x;
Q4 2023 is amended to 2.25x; and
Q1 2024 and thereafter, the Senior Leverage Ratio in unchanged at 2.00x.
The financial covenant testing of the Fixed Charge Ratio is amended as follows:
Q1 2023 through to and including Q3 2023 is amended to 1.10x; and
Q4 2023 and thereafter, the Fixed Charge Ratio is unchanged at 1.25x.
The minimum liquidity covenant in the Credit Agreement will expire in accordance with its terms on March 31, 2023.
For the purposes of calculating the financial ratios that are not suspended:
For the quarter ending on March 31, 2023, testing will be based on an annualized calculation of Adjusted EBITDA (as further adjusted in accordance with the Credit Agreement definitions) based on actual results for the fourth quarter of 2022 and the first quarter of 2023 multiplied by 2;
For the quarter ending on June 30, 2023, testing will be based on an annualized calculation of Adjusted EBITDA based on the actual results of the fourth quarter of 2022, the first quarter of 2023 and the second quarter of 2023 multiplied by 4 and divided by 3; and
Thereafter, testing will be based on an annualized calculation of the cumulative Adjusted EBITDA on a trailing four fiscal quarter basis.
The summary of the Seventh Amendment is qualified in its entirety by reference to the provisions of the Credit Agreement which contains a complete statement of those terms and conditions.
"Similar to our exhibition peers around the world, our business to date has been impacted by COVID-19 related production delays for Hollywood content. As we move forward, however, we have confidence in the ongoing recovery of content volume and a steady pipeline," said Ellis Jacob, President and CEO of Cineplex. "We are pleased with the ongoing support from our lending group and their agreement to relax the financial covenant testing through the remainder of the year as business continues to get stronger," Jacob concluded.
Cineplex (TSX:CGX) is a top-tier Canadian brand that operates in the Film Entertainment and Content, Amusement and Leisure, and Media sectors. Cineplex offers a unique escape from the everyday to millions of guests through its circuit of over 170 movie theatres and location-based entertainment venues. In addition to being Canada's largest and most innovative film exhibitor, the company operates Canada's favourite destination for 'Eats & Entertainment' (The Rec Room) and complexes specially designed for teens and families (Playdium). It also operates successful businesses in digital commerce (CineplexStore.com), alternative programming (Cineplex Events), motion picture distribution (Cineplex Pictures), cinema media (Cineplex Media), digital place-based media (Cineplex Digital Media) and amusement solutions (Player One Amusement Group). Providing even more value for its guests, Cineplex is a partner in Scene+, Canada's largest entertainment and lifestyle loyalty program.
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 Canada and the United States. To learn more, visit Cineplex.com.
For further information
Vice President, Corporate Development and Investor Relations
Caution Regarding Forward-Looking Statements
Certain information included in this news release contains forward-looking statements within the meaning of applicable securities laws. These forward-looking statements include, among others, statements with respect to Cineplex's objectives, goals and strategies to achieve those objectives and goals, as well as statements with respect to Cineplex's beliefs, plans, objectives, expectations, anticipations, estimates and intentions. The words "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, are intended to identify forward-looking statements.
By their very nature, forward-looking statements involve inherent risks and uncertainties, including those described in Cineplex's Annual Information Form ("AIF"), its MD&A for the year ended December 31, 2022 (collectively, the "MD&A"). Those risks and uncertainties, both general and specific, give rise to the possibility that predictions, forecasts, projections and other forward-looking statements will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. Cineplex cautions readers not to place undue reliance on these statements, as a number of important factors, many of which are beyond Cineplex's control, could cause actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to, the duration and impact of the COVID-19 pandemic on Cineplex, the movie exhibition industry and the economy in general, as well as Cineplex's response to the COVID-19 pandemic as it relates to the closure of its theatres and location-based entertainment venues, employee reductions and other cost-cutting initiatives, and increased expenses relating to safety measures taken at its facilities to protect the health and well-being of customers and employees; Cineplex's expectations with respect to liquidity and capital expenditures, including its ability to meet its ongoing capital, operating and other obligations, and anticipated needs for, and sources of, funds; Cineplex's ability to execute cost-cutting and revenue enhancement initiatives in response to the COVID-19 pandemic; and risks generally encountered in the relevant industry, competition, customer, legal, taxation and accounting matters; the outcome of the litigation surrounding the termination of the Cineworld transaction and Cineworld's subsequent bankruptcy proceedings; and diversion of management time on litigation related to the Cineworld transaction and Cineworld's bankruptcy proceedings. The foregoing list of factors that may affect future results is not exhaustive. When reviewing Cineplex's forward-looking statements, readers should carefully consider the foregoing factors and other uncertainties and potential events. Additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in the "Risks and Uncertainties" section of Cineplex's MD&A.
Cineplex does not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable Canadian securities law. Additionally, we undertake no obligation to comment on analyses, expectations or statements made by third parties in respect of Cineplex, its financial or operating results or its securities. All forward-looking statements in this news release are made as of the date hereof and are qualified by these cautionary statements. Additional information, including Cineplex's AIF and MD&A, can be found on SEDAR at www.sedar.com.
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