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A group of Cineworld lenders are exploring a legal challenge to block the company’s £1.6bn debt-fuelled takeover of a Canadian peer.
US and Canadian investors are understood to have hired advisers Houlihan Lokey after buying Cineworld debts at a steep discount on the secondary market.
Cineworld announced plans to buy Cineplex, the dominant cinema chain in Canada, last December. The acquisition would be fully funded by debt. Shareholders backed the deal in February but the fallout from the coronavirus pandemic has thrown it into doubt.
Insiders said the former FTSE 100 company, run by Israeli tycoon Mooky Greidinger, still wants to do the deal but is looking at options to trim the price. The North American distressed debt investors want to block it.
Options, however, are limited. Shareholders have attacked Mr Greidinger and his board for removing standard takeover clauses that would allow the company to negotiate or withdraw in an event such as Covid-19.
Hopes rest on either Cineplex’s own debts spiking sharply or Canadian regulators blocking the deal – scenarios that would void the transaction or force parties back to the negotiating table.
Cineworld’s shares fell almost 90pc between late February and mid-March after it warned that in a worst case scenario it could default on more than $3.5bn (£2.8bn) of loans. The firm has been criticised for taking on too much debt, after buying US chain Regal for £2.7bn in December 2017.
The company’s stock doubled last week after it said it was continuing to “monitor” the Cineplex deal – an apparent softening of language after having previously pledged to plough ahead.
Business Briefing Newsletter REFERRAL (Article)
Last week the company revealed it had opened talks with landlords and film studios to defer debts, and with its banks to discuss additional funding.
All 787 of its theatres are closed and many of its 37,500 staff laid off. The dividend has been cancelled and directors’ salaries and bonuses deferred.
https://www.telegraph.co.uk/business/2020/04/11/lenders-hope-block-cineworld-takeover-cineplex/#:~:text=A%20group%20of%20Cineworld%20lenders,takeover%20of%20a%20Canadian%20peer.
Nightyard, sorry , there is no chance it will be classed as a force majeure. Disruptions, however onerous they are, will not be grounds for arguing a force majeure event. Even if the company faced insolvency as a result- FM would not apply unfortunately.
disruption*
In this industry, it's a stupid time for a take over, especially if it completes at the agreed price.
The disruptive covid-19 has caused is definitely measurable so Force Majuere may apply if deemed to be within scope.
Lots of pie in the sky over on ADVFN. Anyone here think the deal will happen im 50/50. Extension is a good thing as deals start to finalise prices seem to rise few days previous as people in the know get in first, but wouldn’t this be a risky time to do a takeover with 2nd wave hanging around as no-one knows. Thoughts on takeover anyone?