Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

Cineplex Inc. has filed a lawsuit seeking damages from Cineworld Group PLC over the movie-theatre giant’s withdrawal from a $2.2-billion deal to buy the Canadian company.

The Toronto-based cinema operator filed a statement of claim in the Ontario Superior Court of Justice on Friday against Cineworld. The damages sought by Cineplex include the losses to its shareholders – or the difference between the approximately $2.18-billion purchase price that Britain-based Cineworld would have paid when the deal closed and the value of the Cineplex shares, as determined by the court. Cineplex is also seeking compensation for other losses – including approximately $664-million in debt and transaction costs that Cineworld would have repaid or refinanced – and other “punitive and aggravated” damages.

The now scuttled deal, first announced last December, valued Cineplex at $34 per share. Like many theatre operators around the globe, Cineplex is reeling from months of closings owing to the COVID-19 pandemic. Its stock is now trading at $8.50 per share.

Story continues below advertisement

“This is a case of buyer’s remorse,” Cineplex wrote in the court filing. The Canadian company said that Cineworld cited the impact of COVID-19 on Cineplex’s business, but that the terms of the deal excluded “outbreaks of illness” as a condition for termination.

According to the court filing, Cineworld’s correspondence cited reasons for terminating the deal, including that Cineplex had deferred some payments to film distributors and studios during the pandemic, along with rent, damaging its relationships. Cineplex acknowledged the deferrals, but said in its filing that the relationships had not been harmed.

Cineplex also claimed that Cineworld had cited cash management as an example of the Toronto-based company operating outside of the “ordinary course” of business. Cineplex wrote that its “reasonable efforts” to preserve the business through the crisis were done “in good faith.”

None of the claims have been tested in court.

Both companies had received shareholder approval for the transaction, which was supposed to close by the end of June. Cineworld still required regulatory approval under the Investment Canada Act to proceed, and withdrew its request for that approval on June 12, according to Cineplex.

“While Cineplex honoured all of its obligations under the Arrangement, Cineworld did not,” the company said in a statement Friday.

Cineplex announced that it would be pursuing legal action on the day the deal was called off. At the time, Cineworld said that it would “vigorously defend” itself against allegations that it had broke its contractual obligations, and reserved the right to seek damages from Cineplex for breaches.

Story continues below advertisement

Earlier this week, Cineplex announced that it had struck a covenant-relief deal with its lenders, on the condition that it secures at least $250-million in new financing by the end of August, and uses $100-million of that to repay its current line of credit.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies