Cineworld Group plc (LON:CINE) confirmed that Cineplex has initiated proceedings against Cineworld in relation to the termination on 12 June 2020 of the Arrangement Agreement relating to its proposed acquisition of Cineplex. The proceedings allege that Cineworld breached its obligations under the Arrangement Agreement and/or duty of good faith and honest contractual performance and claim damages of up to C$2.18 billion less the value of Cineplex shares retained by Cineplex shareholders. As previously announced, Cineworld did not breach these (or any) obligations or duties and will vigorously defend this claim. In any event, Cineworld believes that Cineplex’s claim, if successful, would be limited to its costs and expenses incurred in relation to the Acquisition and would not be assessed by reference to the consideration that was payable under the Acquisition.
Cineworld terminated the Arrangement Agreement because Cineplex breached a number of its covenants under the Arrangement Agreement. Cineplex did not remedy these breaches when given the opportunity to do so. Cineworld is entitled to recover from Cineplex all damages and losses that it has suffered as a result of Cineplex’s breaches and the Acquisition not proceeding, including its financing costs, advisory fees and other costs incurred. Cineworld intends to counter-claim against Cineplex for these damages and losses.