Cineplex Awarded $1.24 Billion in Damage Over Cineworld Takeover Lawsuit – The Hollywood Reporter

Canadian cinema giant Cineplex said the Ontario High Court won its lawsuit for breach of contract brought against Regal owner Cineworld Group PLC.

Cineplex said it had been awarded $1.236 billion in lost synergies from abandoned takeover deals and $5.5 million in transaction fees. A Canadian court also dismissed Cineworld’s counterclaim against the previous takeover target.

In a 39-page court decision, Judge J. Conway said Cineworld had no legal basis to end its deal to acquire Cineplex. “I have carefully reviewed the alleged infringement and found that Cineplex did not violate any agreement in the regulatory agreement. It does not fail to comply with the operating agreement. It does not violate any of the other agreements during the interim period. Cineworld has no basis for terminating the regulatory agreement. His notification on June 12 was a rejection of the agreement,” the ruling said.

Judge Conway argued that Cineworld misused Cineplex’s $725 million debt provision and its ability to meet them to terminate the transaction before the closing date. “Cineworld cannot refuse to close on this basis nor can it abandon it due to the pandemic because it is excluded from the definition of a material adverse effect on the company,” the ruling added.

“We are pleased that the court found Cineplex acted properly during this difficult period in our history. With roots that go back more than 100 years, we are proud of the relationships we have maintained through this process and remain unwaveringly committed to our guests, shareholders and our teams in Canada and the United States,” said Cineplex president and CEO Ellis Jacob in a statement. a statement. .

In June 2020, Cineworld scrapped its planned $2.1 billion takeover of Cineplex, which would have created one of the world’s largest cinema companies with more than 11,200 screens globally, just as the pandemic was closing theaters. The coronavirus pandemic shut down a large circuit of exhibitors, including Cineplex and Cineworld, and created high debt and liquidity problems. Cineworld then reopened its theater circuit in April 2021.

Cineplex rejected Cineworld’s claims that they had violated the terms of their merger agreement and said it would take legal action to recover damages due to the transaction being discontinued.

Cineworld said it would appeal the Canadian court’s decision. “Cineworld does not agree with this decision and will appeal the decision. Cineworld does not expect damages to be paid while any appeals are ongoing,” the British cinema giant said in a statement of its own.

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