Cineplex seeks to revive Regal merger after Cineworld bankruptcy


Canadian cinema chain Cineplex Inc. has approached the lenders of bankrupt rival Cineworld Group PLC to jump-start a possible merger with the British company’s Regal Entertainment Group franchise, according to people familiar with the matter.

Cineplex has entered preliminary talks with Cineworld’s lenders to take over the U.S.-based Regal theater chain and return to them debt and equity secured by the combined company, the people said.

Cineplex would need to secure support from a wide range of lenders for the merger and Cineworld has not signaled support for its crown jewel chain Regal’s merger with Cineplex in a deal. bankruptcy, these people said. Cineworld does not yet have a clear path out of Chapter 11, but it has the right to make its own restructuring offer to creditors before other alternatives can be offered.


American actor Tom Cruise and British-American actress Hayley Atwell are pictured during the filming of ‘Mission Impossible: Lybra’ on October 6, 2020 in Rome. (Photo by Alberto PIZZOLI / AFP) (Photo by ALBERTO PIZZOLI/AFP via Getty Images) (Photo by Alberto PIZZOLI/AFP/Getty Images)

Cineworld, which bought Regal for about $4 billion in debt and about $2.3 billion in stock in 2017, filed for bankruptcy with about $5 billion in debt. Its lenders keep it afloat through the Chapter 11 process and have a say in the company’s future after bankruptcy.

Cineworld and Cineplex declined to comment.

A merger between Cineplex and Cineworld has already been considered, but on very different terms. Cineworld agreed to acquire Cineplex in 2019 for around $3 billion until the spread of Covid-19 led Cineworld, the world’s second largest cinema operator behind AMC Entertainment Holdings Inc., to walk away from the deal.

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AMC Entertainment Holdings Inc. is the largest movie theater operator in the world. (iStock/iStock)

Cineplex, advised by investment bank Moelis & Co., is now seeking support for a new merger structure, this time as an acquirer, according to people familiar with the matter. It would need support from the company’s major lenders, the majority of whom will need to approve a business plan before Cineworld can emerge from bankruptcy.

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If enough lenders unite, they can likely influence whether they take over the business themselves or pursue a merger or sale instead.

Cineworld backed out of its earlier agreement to merge the two companies citing a significant change in Cineplex’s business due to choices made by its management in handling the pandemic.


Cineplex sued Cineworld in a Canadian commercial court for abandoning the deal, winning in December an award of C$1.29 billion, or about $1 billion, based in part on the company’s expected cost savings. combined.

Cinemark Theater

Many have not returned to theater since before the pandemic in 2022. (Photo by Ethan Miller/Getty Images) (Ethan Miller/Getty Images/Getty Images)

Cineworld’s outlook has deteriorated since then as the global rebound in movie theater attendance failed to meet expectations, prompting the company to file for Chapter 11 protection earlier this month.

The companies held talks this year about merging the operations while settling the legal judgment, but did not reach an agreement, people familiar with the matter said. Cineworld denied any liability to Cineplex and did not pay the judgment, which ranks below the company’s secured debt in the bankruptcy proceedings.


Creditors have paid Cineworld hundreds of millions of dollars to stay afloat during the pandemic, and they will likely take control of most of the company when it emerges from bankruptcy, unless they choose to support a separate plan.

Lenders have already argued for mergers in the event of bankruptcy. American Airlines, which filed for bankruptcy in 2011, merged with US Airways in 2013 after creditors pushed for a restructuring plan to merge the two airlines.

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Cineworld filed for bankruptcy after a slow recovery in theater admissions. Although studio chiefs indicate they want to emphasize theatrical releases now that audiences are leaving home, box office admissions this summer are down about a third from their pre-pandemic trends, according to industry analysts.


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