Cineplex Plans for Financial Flexibility

by Warren Seah

Cineplex, the Canadian movie-theater chain, has announced its intention to raise $408.5 million through a new senior secured notes offering as part of a comprehensive refinancing plan. The goal of this plan is to provide the company with increased financial flexibility.

In order to achieve this, Cineplex is proposing to amend the terms of its existing 5.75% convertible unsecured subordinate debentures, which are due on September 30th of next year. Additionally, the company plans to replace its current senior revolving credit facility with a new $100 million senior secured credit facility.

As part of the refinancing strategy, Cineplex aims to raise $550 million through a private placement of new senior secured notes. Furthermore, it plans to partially redeem its current convertible debentures, totaling $316.3 million in aggregate principal amount, while simultaneously paying down the principal by $100 million.

This comprehensive refinancing plan is designed to bring several benefits to Cineplex. Firstly, it will extend the maturity dates of the company’s debt obligations. Additionally, it will reduce certain restrictions imposed by debt covenants and minimize potential dilution from convertible debentures.

Cineplex has garnered support for this plan from over 61% of its current debenture holders.

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