Cineplex reportedly looking to revive Regal Entertainment merger

According to The Wall Street Journal, the Canadian cinema chain has said to have begun early talks with Cineworld’s lenders about the potential takeover, taking on the debt and stock backed by the merged business in return. 

It would have to garner broad-based lender backing and Cineworld hasn’t signalled support for merging Regal with Cineplex in a bankruptcy deal. The UK-based business, which bought Regal for around $4bn (£3.5bn) in debt and around $2.3bn (£2bn) in 2017, filed for bankruptcy earlier this year with about $5bn in debt (£4.4bn). 

When reached out to by The Wall Street Journal, Cineworld and Cineplex declined to comment. 

It’s not the first time the two businesses have been in talks for a potential tie-up, with Cineworld agreeing to acquire Cineplex back in 2019 for around $3bn (£2.6bn) until the Covid-19 pandemic led Cineworld to walk away from the deal. 

Cineworld walked away citing a material change in business for Cineplex due to choices made by its management in handling the pandemic. The Canadian firm sued Cineworld in a Canadian commercial court for abandoning the transaction - winning a damages award to the tune of 1.29 Canadian dollars (£838m). 

According to The Wall Street Journal, earlier this year the companies held talks about merging operations while settling the legal judgement but didn’t reach an agreement. Cineworld denied liability to Cineplex and hasn’t paid the judgement - ranking below the company’s secured debt in bankruptcy proceedings. 

In days following The Wall Street Journal article, both Cineplex and Cineworld published an update on the case. In its update, Cineplex said - due to Cineworld’s bankruptcy proceedings - it’s not possible to predict the timing or final outcome of its judgement against Cineworld, or whether Cineworld will have the ability to satisfy its claim. 

In its six-month interim results update, Cineworld said it expects its appeal process relating to the Cineplex litigation to remain on hold. It added that any amounts owed to Cineplex will “rank alongside” the company’s other unsecured claims and will be determined as part of the Chapter 11 bankruptcy cases.