(Toronto) Cineplex has signed an agreement to sell its Player One Amusement Group business to US private equity firm OpenGate Capital for $155 million in cash.
The Toronto-based movie theater giant announced Wednesday that OpenGate Capital has purchased its Player One Amusement Group (P1AG), which sells, distributes, operates and services arcade games and other equipment.
As part of this transaction, Player One has signed a long-term agreement to continue to provide and service games in Cineplex cinemas and entertainment venues, including The Rec Room. ) and Junxion.
Cineplex presented the deal as a way to unlock “significant value” for the company and its stakeholders, while increasing its debt repayments.
“As we continue to focus on our growth plan, the P1AG divestiture strategy allows us to strengthen our balance sheet,” said Ellis Jacob, president and CEO of Cineplex, in a statement.
In its latest quarterly financial results, Cineplex reported that its long-term debt at book value stood at 814.8 million as of September 30, including approximately 267 million in convertible debentures.
Paying off debt has been difficult because the COVID-19 pandemic caused many theaters to temporarily close, reducing revenue, and the company spent much of the period struggling with the fallout. of the failure of its sale to the British cinema company Cineworld Group PLC.
The failed $2.8 billion deal ended in a legal battle over whether Cineworld had the right to walk away from the deal. A judge ruled in favor of Cineplex, but Cineworld appealed before filing for bankruptcy in the United States.
However, the company has had some luck in recent months. The “Barbie” movie drew large audiences to the theater chain over the summer, and the fall saw the release of the Taylor Swift concert film.
Many think that Aquaman and the Lost Kingdom, Napoleon, Wonka And Renaissance: A Film by Beyoncé will help Cineplex end 2023 on a high note.
The transaction is expected to close during the first quarter of 2024, subject to regulatory approval and other customary closing conditions.
Drew McReynolds saw the deal as a way for Cineplex to “deleverage” its business and said it could mark a shift in the company’s approach.
“Operationally, we expect the transition from a vertically integrated entertainment strategy within the Cineplex ecosystem to a long-term outsourcing agreement to be seamless,” noted the RBC Dominion analyst. securities in a note sent to its clients on Wednesday.
He added that the deal indicates there has been “value creation” in the arcade sector.
Player One’s history dates back to 2012, when Cineplex created Cineplex Starburst as a 50/50 joint venture with Starburst Coin Machines, a distributor and supplier of arcade games.
In 2015, Cineplex acquired the remaining half of the company and in 2016, Player One was created through a merger with six related companies.
Today, the company has accumulated 37,000 pieces of equipment serving 3,800 locations. Its website also states that it has 19 offices and approximately 500 employees.