Cineplex Gets Relief From Lenders As Third Quarter Revenue Dips 85%
Cineplex Inc. has reached an agreement with lenders to ease its financial commitments until the second quarter of 2021 after the movie theater chain saw revenues drop due to capacity restrictions in theaters.
The Toronto-based company announced third quarter results that fell short of analysts’ expectations. Revenue fell 85% to $ 61 million (US $ 46.4 million) from $ 418.4 million a year ago. Analysts were looking for $ 65.8 million.
– The company tries to slow down the rate of use of cash. It has burned about $ 16.6 million in cash per month in the third quarter and has burned between $ 15 million and $ 20 million per month since the start of the pandemic. It takes advantage of government programs to subsidize employee salaries and seeks to sell its head office to raise funds.
– The company had approximately $ 460 million ($ 350 million) outstanding under its credit facilities as of September 30, according to a statement.
– Cineplex gradually reopened its theaters over the summer to limited capacity, but had to temporarily close them in parts of Canada in October after a second wave of COVID-19. Attendance at movie theaters fell 91%. in the third trimester.
It will not reopen its locations in Toronto, Ottawa and Peel Region anytime soon, even if restrictions are relaxed due to concerns “from a financial standpoint,” spokeswoman Sarah Van said earlier. Lange.
Like other chains, Cineplex suffers from the backlog of several big budget films. Last month, Metro-Goldwyn-Mayer postponed the release of the James Bond film “No Time To Die” until April, pushing shares down to an all-time high.
Bloomberg previously reported that the last big movie of 2020, “Wonder Woman 1984,” could premiere on HBO MAX only a week or two after a theatrical release. “We haven’t discussed this with our partner studios,” CEO Ellis Jacob said in an interview on Friday. “I am not aware that they are going in that direction.”
Cineplex climbed 32% on Monday after Pfizer Inc. said its vaccine, developed with BioNTech SE, protects most people from COVID-19. The stock is down 81% this year and was removed from the S & P / TSX Composite Index on September 21.
“As the second quarter of 2021 begins, things are going to change dramatically, and that will be on the positive side as there is a whole slew of great films set to be released,” Jacob said. “We will go in the right direction.