Ms. Sarah Van Lange reports
CINEWORLD REPUDIATES TRANSACTION TO ACQUIRE CINEPLEX
PLC has delivered notice to Cineplex Inc., purporting to
terminate the arrangement agreement among Cineplex and Cineworld dated Dec. 15, 2019. Under the arrangement agreement, Cineworld agreed to acquire all of the
issued and outstanding common shares of Cineplex. Cineplex believes that Cineworld has
no legal basis to terminate the arrangement agreement and that Cineworld has breached its contractual
obligations. Cineworld's repudiation of the arrangement agreement has been acknowledged by Cineplex,and the transaction will not proceed. Cineplex intends to commence legal proceedings promptly against
Cineworld and seek damages for Cineworld's breaches of the arrangement agreement and failure to
discharge its obligations thereunder.
In the termination notice, Cineworld alleges that Cineplex has taken certain actions that constitute breaches
of Cineplex's covenants under the arrangement agreement, including failing to operate its business in the
ordinary course. In addition, Cineworld alleges that a material adverse effect has occurred with respect to
Cineplex vigorously denies Cineworld's allegations. The arrangement agreement explicitly excludes any
"outbreaks of illness or other acts of God" from the definition of material adverse effect, and all of
Cineworld's allegations stem from an outbreak of illness and act of God (COVID-19). Cineplex believes that
Cineworld's allegations represent buyer's remorse, and are an attempt by Cineworld to avoid its obligations
under the arrangement agreement in light of the COVID-19 pandemic.
Cineworld has breached the arrangement agreement and other contractual obligations because, among
other failures, it did not use its reasonable best efforts to obtain approval under the Investment Canada Act
as soon as reasonably practicable, and has now repudiated the arrangement agreement.
Cineworld had complied with its obligations to obtain ICA approval, Cineplex believes that the ICA approval
would have been obtained, and the transaction would have closed months ago. Cineplex will file suit
promptly to recover all damages available to it to under the arrangement agreement and hold Cineworld
responsible for its breaches and failure to complete the transaction at $34 per common share.
The foregoing summary of certain provisions of the arrangement agreement is qualified in its entirety by the
provisions of the arrangement agreement, a copy of which is available on SEDAR.
Since May 7, 2020, being the date Cineplex announced that it was relying on the blanket relief provided by
the Canadian Securities Administrators to delay the filing of its interim financial statements and related
management's discussion and analysis for the three-month period ended March 31, 2020, there have been no
material business developments other than as described in this news release.
About Cineplex Inc.
Cineplex is a top-tier Canadian brand that operates in the film entertainment and content, amusement
and leisure, and media sectors. A leading entertainment and media company, Cineplex welcomes millions of
guests annually through its circuit of theatres and location-based entertainment venues across the country. In
addition to being Canada's largest and most innovative film exhibitor, Cineplex also operates successful businesses
in digital commerce (Cineplex store), food service and alternative programming (Cineplex events), cinema media
(Cineplex media), digital place-based media (Cineplex digital media) and amusement solutions (Player One
Amusement Group). Additionally, Cineplex operates Canada's favourite destination for eats and entertainment (the
Rec Room) and entertainment complexes specially designed for teens and families (Playdium).
We seek Safe Harbor.
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