Cineworld has been told to pay a CAD $123 billion (USD $957 million, GBP £722 million) fine by a court in Canada for abandoning the takeover of Canadian major Cineplex. The ruling is being appealed by Cineworld, but they might seek a settlement, sell assets, do a listing of their assets in the United States or raise debt to finance any resolution.
The ruling sent Cineworld shares tumbling this week.
The deal fell apart when Cineworld, after having acquired Regal in the US, put in a bid for Cineplex in December 2019, just when COVID was initially spreading through Wuhan. The news caused a dramatic fall in Cineworld’s share price (down 40% at one point), with some analysts warning that it could threaten the future of the company. Cineplex had been seeking more than twice the final amount in damages. A key part of the trial centred on the “material adverse effect” clause that set out circumstances under which either party could terminate the deal. But in a fortuitous clause, the deal specified that an “outbreak of illness” was not a justification for termination.