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Cineworld to make counter-claim as Cineplex seeks damages
6th Jul 2020 07:36
(Sharecast News) - Cineworld said on Monday that it plans to counter-claim against Cineplex after the Canadian cinema chain announced that it was filing a lawsuit against it for backing out of a $2.1bn deal.
Cineworld said last month that it was abandoning its acquisition of Cineplex - a deal that would have created the largest cinema chain in North America. It said at the time that it had become aware of "certain breaches" of the arrangement agreement by Cineplex and that a "material adverse effect" had occurred with respect to Cineplex.
Cineplex said on Friday that it had initiated legal proceedings, claiming that Cineworld breached its obligations and seeking up to CAD2.18bn in damages, less the value of Cineplex shares retained by its shareholders.
Cineworld insisted that it had not breached any of its obligations or duties and said it 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," it said
Cineworld said it terminated the agreement because Cineplex had breached a number of its covenants under the arrangement agreement and did not remedy these breaches when given the opportunity.
The UK cinema chain said it is entitled to recover all damages and losses that it has suffered as a result of Cineplex's breaches and the acquisition not going ahead, including financing costs, advisory fees and other costs incurred.
"Cineworld intends to counter-claim against Cineplex for these damages and losses," it said.
Cineworld said last month that it was abandoning its acquisition of Cineplex - a deal that would have created the largest cinema chain in North America. It said at the time that it had become aware of "certain breaches" of the arrangement agreement by Cineplex and that a "material adverse effect" had occurred with respect to Cineplex.
Cineplex said on Friday that it had initiated legal proceedings, claiming that Cineworld breached its obligations and seeking up to CAD2.18bn in damages, less the value of Cineplex shares retained by its shareholders.
Cineworld insisted that it had not breached any of its obligations or duties and said it 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," it said
Cineworld said it terminated the agreement because Cineplex had breached a number of its covenants under the arrangement agreement and did not remedy these breaches when given the opportunity.
The UK cinema chain said it is entitled to recover all damages and losses that it has suffered as a result of Cineplex's breaches and the acquisition not going ahead, including financing costs, advisory fees and other costs incurred.
"Cineworld intends to counter-claim against Cineplex for these damages and losses," it said.