Mr. Ellis Jacob reports

CINEPLEX ANNOUNCES PROPOSAL TO AMEND ITS CONVERTIBLE DEBENTURES AS PART OF A COMPREHENSIVE REFINANCING PLAN

Cineplex Inc. proposes to amend the terms of its 5.75 per cent convertible unsecured subordinated debentures due Sept. 30, 2025, as part of a comprehensive refinancing plan to improve financial flexibility and strengthen its balance sheet.

The comprehensive refinancing plan includes:

• Repaying in full Cineplex's existing senior revolving credit facility and replacing it with a new $100-million senior secured credit facility with a term of at least three years;
• Conducting a private placement of new senior secured notes with a target size of $550-million and a term to maturity of at least five years;
• Redeeming in full its existing 7.5 per cent senior secured second lien notes due Feb. 26, 2026;
• An amendment to effectuate the extension and partial redemption of its $316.3-million of aggregate principal amount of convertible debentures to, amongst other things, extend the maturity from Sept. 30, 2025, to March 1, 2030, and reduce the principal amount outstanding by $100-million.

The proposed comprehensive refinancing plan will have three key benefits for the company's capital structure: 1) meaningfully extend debt maturities, 2) reduce restrictions imposed by debt covenants and 3) and reduce potential equity dilution from the convertible debentures.

As detailed below, holders of 61.2 per cent of the convertible debentures have committed to support the convertible debenture amendments.

"We remain confident in the long-term fundamentals of theatrical exhibition and all other businesses we operate. During 2023, Cineplex delivered strong year-over-year revenue growth of 26 per cent and nearly tripled its adjusted EBITDAaL," said Ellis Jacob, president and chief executive officer, Cineplex.

"Last week we closed the sale of Player One Amusement Group (P1AG) for gross proceeds of $155-million in cash, which allowed us to significantly deleverage the balance sheet and catalyzed our refinancing initiatives. The refinancing plan being announced today will provide additional financial flexibility and meaningfully extend maturities, allowing Cineplex to execute its growth strategy going forward. With this momentum and an optimized capital structure, Cineplex is well on the path to its target leverage ratio of 2.5 to three times, after which we will consider the reintroduction of a dividend," Mr. Jacob concluded.

Amendment, extension and partial redemption of the convertible debentures

Cineplex has called a meeting of the holders of the convertible debentures in order to consider certain amendments to the trust indenture dated July 15, 2020. The amendments, if approved by the requisite majority of the convertible debentureholders, will result in the following changes to the terms of the convertible debentures:

1. A redemption, on a pro rata basis, of $100-million of the outstanding convertible debentures at a price of 102.35 per cent of par plus accrued and unpaid interest thereon to, but excluding, the date of the redemption;
2. An increase in the interest rate from 5.75 per cent to 7.75 per cent effective April 1, 2024;
3. A decrease in the conversion price from $10.94 to $10.29 per common share (representing a conversion rate of 97.1817 common shares per $1,000 principal amount of convertible debentures);
4. An extension of the maturity date of the convertible debentures from Sept. 30, 2025, to March 1, 2030;
5. The remaining convertible debentures not being redeemable prior to March 1, 2027, and, at any time after March 1, 2027, and prior to March 1, 2029, Cineplex shall be permitted to redeem the convertible debentures, in whole or in part at a price equal to the principal amount thereof plus accrued and unpaid interest to, but excluding, the date of the redemption provided that the volume-weighted average trading price of the common shares on the TSX during the 20 consecutive trading days ending on the fifth trading day preceding the date on which notice of redemption is given is not less than 125 per cent of the conversion price. On and after March 1, 2029, the convertible debentures would be redeemable at the option of Cineplex at any time at par plus accrued and unpaid interest to the date of redemption.

Completion of the convertible debenture amendments is conditional upon the prior or contemporaneous completion of the new notes offering (sized to be no less than $500-million and no more than $600-million), the new senior credit facility and the repayments.

The board of directors of Cineplex unanimously recommends that the convertible debentureholders vote for the proposed convertible debenture amendments.

As of the date of this announcement, holders of 61.2 per cent of the outstanding convertible debentures have signed consent agreements with Cineplex, pursuant to which such supporting debentureholders have consented to the convertible debenture amendments and agreed to vote in favour of the convertible debenture amendments at a meeting of convertible debentureholders to be held on March 14, 2024.

Cineplex will continue to seek additional written consents to support the convertible debenture amendments. If Cineplex obtains written consents from the holders of at least 66-2/3 per cent of the outstanding convertible debentures, Cineplex will have the requisite approval required under the convertible debenture indenture to effect the convertible debenture amendments by way of written consent, and the debentureholder meeting will be cancelled.

If approved, the convertible debenture amendments would be made effective by a supplemental indenture entered into as of the closing date of the new notes offering. The pro rata redemption of $100-million of the outstanding convertible debentures is expected to be completed contemporaneously with the closing of the new notes offering and financed using proceeds from the new notes offering.

The record date for determining the convertible debentureholders entitled to receive notice of and vote at the meeting is Feb. 8, 2024. Further information with respect to the convertible debenture amendments will be contained in a consent and proxy solicitation statement of Cineplex to be sent to convertible debentureholders in connection with the meeting.

The convertible debenture amendments are subject to approval by the Toronto Stock Exchange and formal approval by holders of at least 66-2/3 per cent of the principal amount of the convertible debentures voted at the meeting. Alternatively, the convertible debenture amendments may be approved in writing without the need for a meeting by holders of not less than 66-2/3 per cent of the principal amount of the convertible debentures.

Senior secured notes issuance

As part of the broader proposed refinancing, Cineplex plans to pursue the new note offering, subject to market and other conditions. Cineplex plans to raise total gross proceeds of $550-million through the offering of secured notes with a maturity of at least five years. Proceeds from the secured notes issuance along with proceeds from the previously announced sale of P1AG will be used to: (i) pay down the entirety of the existing senior credit facility; (ii) repay the entirety of the existing second lien secured notes; and (iii) redeem $100-million of the outstanding convertible debentures.

New senior credit facility and repay existing senior credit facility

It is proposed that Cineplex's existing senior credit facility will be repaid in full as part of the proposed refinancing plan. Cineplex intends to enter into the new senior credit facility for $100-million provided by a syndicate of banks.

It is expected that the new senior credit facility will have a covenant-lite structure, including no financial maintenance covenants provided that the utilization on the new senior credit facility (including issued letters of credit) does not exceed an agreed upon threshold.

BMO Capital Markets and Scotiabank Global Banking and Markets are advising Cineplex with respect to the comprehensive refinancing plan and Goodmans LLP is acting as legal counsel to Cineplex.

About Cineplex Inc.

Cineplex is a top-tier Canadian brand that operates in the film entertainment and content, amusement and leisure, and media sectors. Cineplex offers a unique escape from the everyday to millions of guests through its circuit of over 170 movie theatres and location-based entertainment venues. In addition to being Canada's largest and most innovative film exhibitor, the company operates Canada's favourite destination for eats and entertainment (The Rec Room), complexes specially designed for teens and families (Playdium), and a newly launched entertainment concept that brings movies, amusement gaming, dining and live performances together under one roof (Cineplex Junxion). It also operates successful businesses in digital commerce (CineplexStore), alternative programming (Cineplex Events), motion picture distribution (Cineplex Pictures), cinema media (Cineplex Media) and digital place-based media (Cineplex Digital Media). Providing even more value for its guests, Cineplex is a partner in Scene+, Canada's largest entertainment and lifestyle loyalty program.

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