Cinemark is launching an offering of $250 million in senior secured notes. The theater chain said the debt securities will be used for “general corporate purposes,” which include enhancing its liquidity at a time when cinemas have been closed indefinitely due to the coronavirus.
Cinemark, which is the third largest exhibitor, said the debt will be secured by a first-priority lien on its leases. The debt sale comes as the exhibition sector is in free fall. It’s unclear when coronavirus will have dissipated enough for cinemas to reopen.
Studios have pushed many of their upcoming releases back until later in 2020 or 2021, meaning that the summer blockbuster season will essentially be a wash. That’s catastrophic for the movie business, which makes more than half of its revenues during the summer.
Some chains, such as AMC Theaters, appear to be on the verge of insolvency, while others are hoping that the federal stimulus bills will help them secure loans that they need to remain in business.
Cinemark has furloughed employees and shut down nearly all of its nearly 350 locations nationwide. CEO Mark Zoradi and Cinemark’s board of directors will forgo their salaries during the crisis. Cinemark had a debt load of $3.4 billion at the end of 2019.
“Cinemark’s priority as it navigates through this uncertainty is to ensure that the company will be able to once again open theatres and employ our global team members,” Zoradi said last month in a statement announcing employee wage cuts. “I look forward to the day in the hopefully not-to-distant future when the Cinemark team can once again welcome guests to enjoy the immersive moviegoing experience we offer at our theatres.”