15th Dec 2021 10:55
(Alliance News) - Cineworld Group PLC on Wednesday said it has been told to part with CAD1.23 billion, about GBP720.3 million, after a Canadian court ruled against the movie house operator in a case brought by jilted takeover target Cineplex.
Shares in London-based Cineworld were down 27% at 32.95 pence each on Wednesday morning in London.
The Toronto based entertainment company Cineplex initiated proceedings because it alleged that Cineworld breached its obligations under their arrangement agreement and its duty of good faith after the company decided to cancel its acquisition of Cineplex.
Cineworld had agreed to the acquisition before the pandemic and cancelled it as lockdowns closed cinemas.
Cineplex claimed damages of up to CAD2.18 billion, around GBP1.28 billion, less the value of Cineplex shares retained by Cineplex shareholders.
Cineworld, on the other hand, defended that it had terminated the agreement because Cineplex breached a number of its covenants.
Therefore, the company counter-claimed against Cineplex for damages and losses suffered as a result of these breaches and the acquisition not proceeding.
Nonetheless, the Ontario Superior Court of Justice decided in Cineplex's favour and awarded the entertainment company damages of CAD1.23 billion for lost synergies and CAD5.5 million for lost transaction costs.
Cineworld's counterclaim was dismissed, though the company said it will appeal the judgment.
Furthermore, Cineworld stated that it does not expect these damages to be payable whilst any appeal is ongoing.
By Abby Amoakuh; [email protected]
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