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    CINE   GB00B15FWH70


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Cineworld planned to sell off Cineplex's signage, RecRoom business: theatre CEO

10/06/2021 | 12:33pm EST

TORONTOCineworld Group PLC's chief executive was planning to sell off Cineplex Inc.'s RecRoom and signage business in a secret initiative he called "Project Jumanji."

The U.K. cinema chain's head Moshe "Mooky" Greidinger testified Wednesday at the Ontario Superior Court of Justice that his company was looking to find buyers for the businesses because he wanted to focus on theatres and Cineworld didn't have expertise in these other areas.

Greidinger called the digital sign venture and arcade and dining venues known as RecRoom "good businesses," but said his company was drawing up documents and looking for buyers up until March, when "all hell broke loose" and COVID-19 spread.

"We understood (the sale) had to wait," he said. "We understood we needed to run them for awhile and after we'd sell them for a good price."

Greidinger's remarks are part of a multibillion-dollar court case that has seen his cinema company face off against Cineplex, the Toronto theatre chain it announced it would purchase for $2.8 billion in December 2019.

Cineworld backed out of the deal to buy Cineplex Inc. in June 2020, arguing it had the right to terminate the agreement without payment because Cineplex strayed from “ordinary course.”

Cineplex is seeking more than $2.18 billion in damages from Cineworld, which filed a counter claim valued at about $54.8-million.

Cineworld claims it was out of the ordinary for Cineplex to defer its accounts payable by at least 60 days, reduce spending to the “bare minimum” and stop paying landlords, movie studios, film distributors and suppliers at the pandemic’s start.

But in September, Cineplex staff like chief executive Ellis Jacob testifiedthese moves were normal for a company coping with the pandemic and pointed out that other entertainment businesses like Cineworld acted similarly.

Cineplex has also alleged Cineworld was quietly planning to end the deal as early as March 2020, well before it gave notice to Cineplex in June. The company further claimed that Cineworld drew out government approvals and sought financing that compromised the takeover.

Greidinger denied those assertions Wednesday, but revealed that some of his staff had concerns about Cineplex keeping its debt below the agreed upon $725 million level.

Cineworld chief financial officer Nisan Cohen, he said, expressed doubts about Cineplex meeting the deal's terms in March, which were further exacerbated when "Star Wars: Episode IX - The Rise of Skywalker" had a "disappointing" impact on the box office.

Soon after, Cohen's feelings were echoed by Israel Greidinger, Moshe's brother and Cineworld's deputy chief executive officer.

Greidinger monitored such doubts as theatres rapidly started to close around the world because of the spread of COVID-19. It was unlike anything he or his family, which has been in the theatre business since the 1930s, had ever seen.

"Mid-March was not an earthquake. Really the sky fell on us," Greidinger said.

Yet, he was still committed to buying Cineplex, which Cineworld had been eyeing ever since it purchased Regal Cinemas in the U.S. in 2018.

"I hoped that things would turn around and we'd do it," said Greidinger.

"But there were other problems on the other side that were slowly killing the deal."

Greidinger maintains that he was in communication with Jacob throughout the sale process, as government approvals were sought and as the deal's closing date neared.

He said he was asked by Jacob to keep some human resources plans confidential prior to the deal closing because he was worried they would cause "turbulences," threaten government approvals or cause a large number of staff to leave.

While he and Jacob had different views about Cineplex's digital sign and RecRoom ventures, Greidinger said he respected the businesses and "acted only in good faith."

Cineplex has long been operating businesses that diversify its offerings beyond theatres because box office swings can be unpredictable and volatile and streaming options have proliferated the entertainment industry.

This report by The Canadian Press was first published Oct. 6, 2021.

Companies in this story: (TSX:CGX)

© 2021 The Canadian Press. All rights reserved., source Canadian Press DataFile

Stocks mentioned in the article
ChangeLast1st jan.
CINEPLEX INC. 2.55% 11.66 Delayed Quote.22.65%
CINEWORLD GROUP PLC 0.22% 49.16 Delayed Quote.-23.31%
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Analyst Recommendations on CINEWORLD GROUP PLC
More recommendations
Sales 2021 1 417 M 1 884 M 1 884 M
Net income 2021 -535 M -712 M -712 M
Net Debt 2021 6 341 M 8 431 M 8 431 M
P/E ratio 2021 -1,38x
Yield 2021 -
Capitalization 675 M 898 M 898 M
EV / Sales 2021 4,95x
EV / Sales 2022 2,35x
Nbr of Employees 30 432
Free-Float 64,3%
Duration : Period :
Cineworld Group plc Technical Analysis Chart | CINE | GB00B15FWH70 | MarketScreener
Technical analysis trends CINEWORLD GROUP PLC
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus HOLD
Number of Analysts 10
Last Close Price 49,16 GBX
Average target price 90,10 GBX
Spread / Average Target 83,3%
EPS Revisions
Managers and Directors
Moshe Joseph Greidinger Chief Executive Officer & Non-Executive Director
Nisan Cohen Chief Financial Officer & Executive Director
Alicja Kornasiewicz Chairman
Matthew Eyre Chief Operating Officer
Arni Samuelsson Independent Non-Executive Director
Sector and Competitors