Entertainment giant in Burnaby’s biggest mall takes a $178M beating

The film giant that runs Burnaby’s only movie theatre – with plans to add another one in Burnaby – is hoping to lure back customers on Friday.

They’re starting with some $5 movies at Metropolis at Metrotown, but really need some blockbusters to be released soon. Many films have been postponed due to the pandemic or released on demand.

They need customers to come back because Cineplex has lost $178 million since the COVID-19 pandemic hit Canada.

Cineplex needs moviegoers to be willing to return to its theatres as the company deals with an uncertain future in the wake of its failed plan to sell itself to Cineworld.

"At this point we're looking to stabilize the company and get everything in the right place," chief executive Ellis Jacob said.

Cineplex is in the middle of building a five-screen VIP movie theatre at Burnaby's the Amazing Brentwood, as well as a Rec Room entertainment complex.

Cineplex shares were down more than 17 per cent to $8.23 on the Toronto Stock Exchange after the company warned about its ability to "continue as a going concern" in its release of delayed quarterly results.

Cineplex reached a deal with its lenders to provide some financial relief due to the COVID-19 pandemic which forced the company to close its theatres in March.

The agreement can be extended to the second and third quarters of 2020, but to do that the company needs to secure a minimum of $250 million in new financing.

In financial documents released Monday evening, Cineplex warned that the uncertainties it has faced "lend significant doubt about the company’s ability to continue as a going concern."

"While Cineplex currently has sufficient liquidity to satisfy its immediate financial obligations, there can be no assurance that the steps that management is taking will provide sufficient liquidity in the near term to meet its ongoing obligations, nor can it be assured that it will be able to obtain additional financing at favorable terms, or at all," the company said.

The warning came as Cineplex is set to reopen some theatres in British Columbia, Saskatchewan, Quebec, New Brunswick, Nova Scotia and Newfoundland on Friday.

The company welcomed back customers to its Rec Room gaming and food complexes in Winnipeg, Calgary and Edmonton during the week of June 15 and reopened six theatres in Alberta on June 26.

"We're optimistic, but it's baby steps because we have to be careful," Jacob said.

Moviegoers heading back to theatres are in for an experience unlike the one they left in March. To keep guests distanced, reserved seats will be rolled out in every auditorium, which will get additional cleanings.

Some moviegoers will be clad in masks. Cineplex won't make them mandatory, but will hand them out and encourage their use.

Concession stands — once a big money-maker for Cineplex — will be pared back to popcorn and a few other favourites, with some of the items that require more intense cooking taking a temporary hiatus.

The changes come amid the aftermath of Cineworld PLC's abortive $2.8-billion takeover deal to buy Cineplex. Cineworld claims it walked away from the deal after Cineplex breached the contract, while Cineplex has vowed to sue.

Jacob has not ruled out another deal to sell Cineplex. "One has to look at all the options that come forward," he said.

Cineplex lost $178.4 million or $2.82 per diluted share for the three months ended March 31, compared with a loss of 12 cents per share or $7.36 million a year earlier.

Revenue tumbled to $282.8 million from $364.6 million, while attendance plunged to 10.7 million from nearly 15 million.

Cineplex also scrapped its dividend and warned it wouldn't expect one to return in the near future.

Jacob says he has heard that moviegoers are tired of watching films at home and want new releases, but he's tied to screening what distributors and studios will allow, so he's focused most on rebuilding consumer confidence and convincing people that it's safe to head to the theatre again.

"I'd rather see an auditorium full of people than people watching at home," Jacob said.

"We need to get the guests comfortable and we need to bring them back to our environment and then we will look at the opportunities as we move forward. We have to put this COVID fear behind us."

  • With files from the Canadian Press

 

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