Cinemex Works on Restructuring Deal, Shutters Theaters
(Bloomberg) -- Mexico’s second-largest movie theater chain, Grupo Cinemex SA, is closing its cinemas indefinitely and is working with banks to restructure at least $230 million in debt.
Cinemex, owned by the family that controls copper miner Grupo Mexico, is closing in on a deal with banks including Banco Bilbao Vizcaya Argentaria SA, HSBC Holdings Plc, Banco Santander SA and Bank of Nova Scotia, according to people familiar with the private negotiations.
To ease its cash burn, Cinemex decided to shut 145 cinemas outside the capital area until Hollywood resumes major film releases and it’s clear the company can operate without severe restrictions, the people said.
The chain’s debt includes a 4.05 billion peso ($202.6 million) term loan and a 640 million peso term loan, both due March 2023.
Representatives for Cinemex, Santander and BBVA didn’t immediately respond to requests for comment. Representatives for Bank of Nova Scotia and HSBC declined to comment.
After the Covid-19 pandemic shuttered theaters around the world last year, Cinemex pumped cash into its business to keep operating and kept up interest payments even as new releases from Hollywood petered out, said the people, who asked not to be identified because talks are private. The company’s U.S. unit, Cinemex Holdings USA Inc., filed for bankruptcy last year and emerged after renegotiating certain leases.
Theaters reopened with limited capacity in August in Mexico City, but the chain wasn’t able to reap gains from blockbusters like December’s “Wonder Woman 1984” when the capital and the surrounding state of Mexico reinstated restrictions after a spike in Covid-19 cases. The move closed 200 Cinemex theaters, or about 58% of the chain’s complexes. Other locations around the country faced capacity restrictions and early closing times.
Cinemex’s bigger rival Cinepolis de Mexico SA started restructuring talks in December on more than $1 billion in loans it used to fuel its global expansion over the last decade. And AMC Entertainment Holdings Inc., the world’s largest theater chain, recently raised $917 million to help weather the pandemic.
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Cinemex is backed by the deep pockets of German Larrea, whose family has the country’s second-biggest fortune from Grupo Mexico and its Peruvian copper miner Southern Copper Corp. Banks have looked favorably on Cinemex’s willingness to pump more cash into the business as well as on its recovery plan, one of the people said.
Mexico’s two chains are among the largest in the world. In the mid-1990s, a Canadian theater chain manager teamed up with a couple of Mexican students at Harvard Business School to found Cinemex. The company deployed state-of-the-art theaters in Mexico.
Cinepolis, run by former World Bank economist Alejandro Ramirez, built luxurious theaters with VIP sections, bars and sushi and expanded to 17 countries.
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