(Image via Cineplex.com.)
Like coming out of a bad breakup,
Cineplex Inc. (TSX: CGX) had a lot of baggage to deal with after the public fallout of its
cancelled $2.8 billion takeover by Britain’s
Cineworld Group Plc (LSE: CINE), its litigation against Canada’s theatre chain that followed, as well as the struggle to re-open while the COVID-19 coronavirus pandemic continues to hamper its core business in a world that is drifting toward different ways to consume entertainment.
Investors have been waiting for further guidance on what to do with their shares in this company, given both this failed deal and the COVID-19 social quarantines that caused it. Some light will be shed on the issue when CGX holds its Q2 2020 financial results conference call on Friday, August 14th, 2020.
You can find out more about that call and how to dial-in
here.
On June 29th, 2020, Cineplex released its financial results for
Q1 2020, which were heavily impacted by the COVID-19 coronavirus pandemic, as the company was forced to temporarily closed all of its theatres and location-based entertainment venues in March. Cineplex endured a 22.4% decline in total revenue, a loss of $81.8 million (CAD) during this time to $282.8 million, compared to $364.6 million the prior year period.
Ahead of this Q2 update, Canada’s top theatre chain made news
earlier this week when it closed its over-allotment option of an additional $41,250,000 aggregate principal amount of 5.75% convertible unsecured subordinated debentures in connection with its recently completed convertible debenture underwritten offering of $275 million aggregate principal amount of debentures.
When it was first announced at the beginning of the month, Cineplex stated that will use the net proceeds of this offering to repay indebtedness under its credit facilities, of which $100 million would be a permanent repayment and the balance would be available for borrowing under the company's revolving credit facility.
Cineplex’s President and CEO, Ellis Jacob called this “unprecedented times” as the theatre chain is still in its early days of its reopening process, adding that it is impossible to predict how long this crisis will last and how significant the impact will be on the business.
CINE stock has been one of the hardest hit since March, it currently offers a substantial bargain for investors compared to its earlier value, but what remains to be seen is how its worth will be weighed in the future.
(Cineplex Stock Chart – February 2020 – July 2020.)
What do you expect Cineplex’s Q2 results will have in store? Will it be a surprising rebound as investors flocked on what they perceived to be a bargain stock, or a case of “how low can it go”? Let us know your thoughts in the comments below.