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The nation’s third largest exhibitor, Cinemark, said Monday it’s selling $250 million worth of debt securities – senior secured notes – and will use the net proceeds of the proposed offering for general corporate purposes, including further increasing its liquidity.
Chains are in a massive cash crunch as movie theaters remain closed since mid-March due to the coronavirus pandemic. Some in the industry, like AMC Entertainment CEO Adam Aron, have said they hope and anticipate theaters will reopen in June but that prospect is far from certain. Cinemark’s CEO along with Aron of AMC are not taking salaries as employees are furloughed as the companies hunker down to try to weather the shutdown financially.
Cinemark said the notes will be guaranteed by certain company subsidiaries, “The Notes and the guarantees will be the company’s and the guarantors’ senior obligations secured by a first-priority lien on certain of the company’s leasehold interests in real property.” The notes are due in 2025.
Plano, Texas-based Cinemark operates under the Cinemark, Century, Tinseltown and Rave names with 554 theatres and 6,132 screens in 42 states domestically and 15 countries in South and Central America.
In a letter to shareholders in the proxy, Zoradi acknowledged “the social and economic effects of COVID-19, which are widespread and hard-hitting. Everyone continues to battle through this uncertainty, including Cinemark.” With theater shuttered, he said, “We are taking prudent steps to withstand the economic impact of our temporary closures during this pandemic. Our priority as we navigate this uncharted territory is to ensure that Cinemark will be able to open its theatres and employ our global team members when this pandemic subsides.”