CGX:CC - Cineplex is selling P1AG to 'strengthen balance sheet'

2023-11-22 10:02:32 ET

Cineplex Inc (TSE: CGX) has agreed to sell the Player One Amusement Group to OpenGate Capital. Its shares are down 1.0% at writing.

Details of Cineplex-OpenGate deal

OpenGate is paying $155 million in cash to acquire its amusement solutions division.

Cineplex expects this transaction to unlock significant value for its stakeholders and secure liquidity for debt repayment. Ellis Jacob – its Chief Executive said in a press release today:

As we continue to focus on our growth plan, the strategy to divest P1AG came at an opportune time to strengthen our balance sheet.

The news arrives only days after Cineplex reported C$463.6 million in revenue for its third financial quarter – an all-time high. Its shares are currently down more than 10% versus their year-to-date high in May.

P1AG will continue to work with Cineplex

Cineplex expects the agreement with OpenGate to complete in the first three months of next year provided that it satisfies the customary closing conditions including regulatory approvals.

P1AG delivers arcade games, entertainment and other amusement solutions across North America. On Wednesday, it signed a long-term agreement with the cinema chain to “continue to supply and service amusement games” in its theatres.

Goodmans LLP is serving as the legal advisor of Cineplex for the said transaction while TD Securities and Scotiabank are serving as its financial advisors.

Earlier this year, CEO Jacob said the box office will likely remain strong even if Canada slips into a recession. Wall Street currently has a consensus “buy” rating on CGX.

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