Cineplex Falls 29% to Record Low, Crushed by Bond Film Delay
(Bloomberg) -- Cineplex Inc., Canada's largest chain of movie theaters, plummeted 29% to a record low on Monday after Metro-Goldwyn-Mayer delayed the release of James Bond movie ‘No Time to Die' until April.
The decline followed other theater stocks, including Cineworld Group Plc, which agreed to buy Toronto-based Cineplex for C$34 a share last year but walked away from the deal in June. Cineplex closed at C$4.75 after suffering its largest one-day drop since March 16, when the chain first closed locations to limit the spread of Covid-19. The venues started reopening through the summer, as government-imposed lockdowns eased.
“With each film postponement, the dominoes keep dropping and materially jeopardizing the effort of movie theaters to monetize a reopening that began this summer, but hasn't had much to offer audiences in terms of new releases,” National Bank Financial analyst Adam Shine said in an Oct. 4 note in which he downgraded Cineplex to a hold-equivalent rating from buy.
Read more: Cineworld Close to Hiring PJT as Adviser Ahead of Debt Talks
A Cineplex convertible bond due in 2025 also tumbled Monday, falling 10% to trade at 89 cents on the dollar. The company closed the C$316 million ($238 million) convertible issue in July as part of a liquidity plan to survive the pandemic.
A second wave of the virus in cities including Toronto and Ottawa prompted Ontario's government to tighten restrictions again on Friday, imposing new rules on restaurants, gyms and event facilities. Theaters are not affected by the latest measures, though they are already operating under capacity restrictions. Toronto-based Cineplex said it doesn't have any current plans to close theaters.
“While we are always reviewing and refining our operating plans, we are staying the course and will proudly continue offering a safe, comfortable and welcoming movie-going environment for Canadians,” Cineplex spokeswoman Sarah Van Lange said in an emailed statement.
©2020 Bloomberg L.P.
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