FORM 10 - Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 1-9454
CINEPLEX ODEON CORPORATION
(Exact name of Registrant as specified in its charter)
Ontario, Canada Non-Resident Alien
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1303 Yonge Street, Toronto, Ontario M4T 2Y9
(Address of principal executive offices) (Postal Code)
416-323-6600
(Registrant's telephone number
including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter periods
that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X or No
As of November 2, 1997, 103,352,907 shares of Cineplex Odeon Corporation
Common Stock were outstanding.
TOTAL NO. OF PAGES
EXHIBIT INDEX PAGE
<PAGE>
CINEPLEX ODEON CORPORATION
FORM 10-Q
SEPTEMBER 30, 1997
Index
PART I - FINANCIAL INFORMATION Page No.
ITEM 1 - Financial Statements (Unaudited)
Consolidated Balance Sheet
September 30, 1997 and December 31, 1996
Consolidated Income Statement
Three Months Ended September 30, 1997 and
September 30, 1996 and;
Nine Months Ended September 30, 1997 and
September 30, 1996
Consolidated Statement of Changes in Cash Resources
Nine Months Ended September 30, 1997 and
September 30, 1996
Notes to the Consolidated Financial Statements -
September 30, 1997
ITEM 2 - Management's Discussion and Analysis of Results of
Operations and Financial Condition
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
ITEM 6 - Exhibits and Reports on Form 8-K
SIGNATURE PAGE
<PAGE>
CINEPLEX ODEON CORPORATION
CONSOLIDATED BALANCE SHEET
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Unaudited Audited
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 3,086 $ 2,718
Accounts receivable 12,494 9,552
Other 12,743 8,852
--------------- ---------------
28,323 21,122
PROPERTY, EQUIPMENT AND LEASEHOLDS 576,574 579,841
OTHER ASSETS
Long-term investments and receivables 2,141 2,535
Goodwill 31,980 32,816
Deferred charges 8,556 7,857
-------------- ---------------
42,677 43,208
-------------- ---------------
TOTAL ASSETS $ 647,574 $ 644,171
============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accruals $ 58,453 $ 59,474
Deferred income 18,085 17,150
Current portion of long-term debt
and other obligations 7,068 6,926
------------- --------------
83,606 83,550
LONG-TERM DEBT 354,334 326,058
CAPITALIZED LEASE OBLIGATIONS 6,803 8,317
DEFERRED INCOME 4,392 6,594
PENSION OBLIGATION 786 1,072
SHAREHOLDERS' EQUITY
Capital stock 555,399 555,374
Translation adjustment 2,700 4,016
Retained earnings (deficit) (360,446) (340,810)
------------- ------------
197,653 218,580
COMMITMENTS AND CONTINGENCIES (notes 2 and 4)
------------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 647,574 $ 644,171
============= ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
CINEPLEX ODEON CORPORATION
CONSOLIDATED INCOME STATEMENT
(in thousands of U.S. dollars except per share figures)
<TABLE>
<CAPTION>
Unaudited
3 Months Ended 3 Months Ended 9 Months Ended 9 Months Ended
Sept. 30, 1997 Sept. 30, 1996 Sept. 30, 1997 Sept. 30, 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUE
Admissions $ 104,161 $ 99,893 $ 298,485 $ 274,094
Concessions 39,130 36,169 110,680 97,101
Other 6,669 5,914 18,556 16,915
------------- ------------ ----------- ----------
149,960 141,976 427,721 388,110
EXPENSES
Theatre operations
and other expenses 119,366 113,412 346,148 316,400
Cost of concessions 8,150 6,473 21,513 17,323
General and administrative 4,944 4,625 15,152 13,330
Depreciation and amortization 11,091 10,943 33,267 32,376
------------ ------------ ----------- -----------
143,551 135,453 416,080 379,429
------------ ------------ ----------- -----------
Income before the undernoted 6,409 6,523 11,641 8,681
Other expenses (4,716) (458) (5,284) (1,295)
------------ ------------ ------------- -----------
Income before interest
on long-term debt
and income taxes 1,693 6,065 6,357 7,386
Interest on long-term debt 8,589 8,736 25,159 27,478
------------ ------------ ------------- -----------
Loss before income taxes (6,896) (2,671) (18,802) (20,092)
Income taxes 268 299 834 1,105
------------ ------------ ------------- ------------
NET LOSS $ (7,164) $ (2,970) $ (19,636) $ (21,197)
============ ============ ============= ============
BASIC
Weighted average
shares outstanding 176,799,000 176,765,000 176,793,000 159,007,000
Loss per share ($0.04) ($0.02) ($0.11) ($0.13)
FULLY DILUTED
Weighted average
shares outstanding 191,254,000 183,362,000 191,265,000 166,082,000
Loss per share ($0.04) ($0.02) ($0.11) ($0.13)
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
CONSOLIDATED STATEMENT OF CHANGES IN CASH RESOURCES
(in thousands of U.S. dollars except per share figures)
<TABLE>
<CAPTION>
Unaudited
9 Months Ended 9 Months Ended
Sept. 30, 1997 Sept. 30, 1996
-------------- --------------
<S> <C> <C>
CASH PROVIDED BY(USED FOR)
OPERATING ACTIVITIES
Net loss $ (19,636) $ (21,197)
Depreciation and amortization 33,267 32,376
Other non-cash items (2,124) (1,569)
--------------- ---------------
11,507 9,610
Net change in non-cash working capital (6,955) (3,027)
--------------- ---------------
4,552 6,583
FINANCING ACTIVITIES
Decrease in long-term debt
and other obligations (2,981) (67,835)
Increase in long-term debt
and other obligations 29,606 -
Issue of share capital, net of issue costs 26 82,877
Other (255) (1,474)
-------------- ---------------
26,396 13,568
INVESTMENT ACTIVITIES
Additions to property, equipment
and leaseholds (32,940) (18,981)
Long-term investments - (260)
Proceeds on sale of certain theatre properties 2,827 1,901
Other (467) (2,488)
-------------- --------------
(30,580) (19,828)
-------------- --------------
NET INCREASE DURING PERIOD 368 323
CASH AT BEGINNING OF PERIOD 2,718 1,604
-------------- --------------
CASH AT END OF PERIOD $ 3,086 $ 1,927
============== ==============
CASH FLOW FROM OPERATING ACTIVITIES PER SHARE
Basic $ 0.03 $ 0.04
Fully Diluted $ 0.02 $ 0.04
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
CINEPLEX ODEON CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(in U.S. dollars)
(Unaudited)
1. BASIS OF PRESENTATION
The consolidated financial statements in this quarterly report to
shareholders are prepared in accordance with accounting principles
generally accepted in Canada. For the three and nine months ended
September 30, 1997, the application of accounting principles generally
accepted in the United States did not have a material effect on the
measurement of the Corporation's net loss and shareholders' equity. For
information on differences between Canadian and United States generally
accepted accounting principles, reference is made to the Corporation's
1996 annual report to shareholders.
The consolidated financial statements in this quarterly report to
shareholders are based in part on estimates, and include all adjustments
consisting of normal recurring accruals that management believes are
necessary for a fair presentation of the Corporation's financial position
as at September 30, 1997, and the results of its operations for the three
and nine months then ended. Operating results for the three and nine
months ended September 30, 1997 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1997.
The consolidated financial statements and related notes have been
prepared in accordance with generally accepted accounting principles
applicable to interim periods; consequently they do not include all
generally accepted accounting disclosures required for annual
consolidated financial statements. For more complete information these
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes contained in the
Corporation's 1996 annual report to shareholders.
2. COMMITMENTS AND CONTINGENCIES
i) The Corporation and its subsidiaries are currently subject to audit by
taxation authorities in several jurisdictions. The taxation authorities
have proposed to reassess taxes in respect of certain transactions and
income and expense items. The Corporation and its subsidiaries are
vigorously contesting the adjustments proposed by the taxation
authorities. Although such matters cannot be predicted with certainty,
management does not consider the Corporation's exposure to such
litigation to be material to these financial statements.
ii) The Corporation and its subsidiaries are also involved in certain
litigation arising out of the ordinary course and conduct of its
business. The outcome of this litigation is not currently determinable.
Although such matters cannot be predicted with certainty, management does
not consider the Corporation's exposure to such litigation to be material
to these financial statements.
iii) As at September 30, 1997, the Corporation was in compliance with the
financial covenants contained in its bank credit facilities. Given the
uncertainty with respect to the admission and concession revenues that
the Corporation will generate, there is a possibility that the
Corporation may not meet certain financial covenants in future periods.
The Corporation believes that the banking syndicate participating in the
bank credit facilities would waive the particular financial covenants if
the Corporation is not in compliance at a measurement date during the
next twelve month period.
3. SUMMARY FINANCIAL INFORMATION
The following is consolidated summarized financial information of the
Corporation's wholly owned subsidiary Plitt Theatres, Inc.:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Unaudited
3 Months Ended 3 Months Ended 9 Months Ended 9 Months Ended
Sept 30, 1997 Sept 30, 1996 Sept 30, 1997 Sept 30, 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 95,922,000 $ 95,433,000 $ 273,263,000 $ 266,447,000
=============================================================================================
Income before general
and administrative expenses,
depreciation and amortization,
interest on long-term debt
and income taxes $ 7,431,000 $ 14,993,000 $ 26,227,000 $ 35,463,000
============================================================================================
Net loss $ (11,823,000) $ (4,222,000) $ (31,899.000) $ (22,291,000)
===========================================================================================
- ---------------------------------------------------------
Sept 30, 1997 December 31, 1996
- ---------------------------------------------------------
Current assets $ 22,043,000 $ 17,105,000
Noncurrent assets 471,579,000 484,618,000
Current liabilities 83,201,000 55,078,000
Noncurrent liabilities 277,923,000 265,386,000
=========================================================
</TABLE>
Current liabilities at September 30, 1997 include a net payable to the
Corporation and other corporations within the consolidated group in the
amount of $21,984,000 (December 31, 1996 - net payable of $9,551,000).
Noncurrent liabilities at September 30, 1997 and December 31, 1996
include $10,000,000 that is owed to the Corporation.
4. PROPOSED MERGER
On September 30, 1997, the Corporation announced that it has entered
into an agreement with Sony Pictures Entertainment Inc. (Sony Pictures)
and LTM Holdings, Inc. (LTM) which provides for the combination of the
businesses of the Corporation and LTM. LTM is a private Delaware
corporation wholly-owned by Sony Pictures. The transaction will involve
combining the Corporation with the Loews Theatres Exhibition Group,
which consists of Sony/Loews Theatres and its joint ventures with Star
Theatres and Magic Johnson Theatres. It is proposed that the combined
company will be named Loews Cineplex Entertainment Corporation (LCE).
LCE will have over 2,600 screens in approximately 460 locations in North
America.
Pursuant to a series of related transactions to be effected pursuant to
a Plan of Arrangement under the Business Corporations Act (Ontario), the
Corporation's shares will be exchanged for shares of LCE with the result
that the Corporation will become a wholly-owned subsidiary of LCE. Upon
closing of the transaction, Sony Pictures will own approximately 51.1%
of LCE's shares (representing 49.9% of LCE's voting shares); Universal
Studios, Inc. (Universal) will own approximately 26% of LCE's shares
(subsequent to a cash subscription of approximately $84.5 million);
the Charles Rosner Bronfman Family Trust and certain
related parties (the Bronfman Trust) will own approximately 9.6% of
LCE's shares; and the shareholders of the Corporation, other than
Universal and the Bronfman Trust, will own approximately 13.3% of LCE's
shares. It is intended that the LCE shares will be listed on the New
York Stock Exchange and The Toronto Stock Exchange.
The merger is subject to approval by the shareholders of the Corporation
and regulatory approval in both Canada and the United States. It is
anticipated that closing of this transaction will take place in
approximately five months.
5. RECLASSIFICATION
Certain of the prior period's balances have been reclassified to conform
with the presentation adopted in the current period.
<PAGE>
Management's Discussion and Analysis of
Results of Operations and Financial Condition
(All figures are in U.S. dollars except where otherwise noted)
The Corporation's net loss for the three months ended September 30, 1997
was $7,164,000 or $0.04 per share compared to a net loss of $2,970,000 or
$0.02 per share for the same period in 1996. Total revenue for the three
months ended September 30, 1997 was $149,960,000 compared to $141,976,000
for the comparable period in the prior year. The increase in revenue in
the third quarter of 1997 was offset by an increase in occupancy costs
associated with the Corporation's new theatres. For the nine months ended
September 30, 1997 the Corporation reported a net loss of $19,636,000 or
$0.11 per share compared to a net loss of $21,197,000 or $0.13 per share
for the nine months ended September 30, 1996. Total revenue for the nine
months ended September 30, 1997 was $427,721,000 compared to $388,110,000
for the comparable period in the prior year
On September 30, 1997, the Corporation announced that it has entered into
an agreement with Sony Pictures Entertainment Inc. (Sony Pictures) and
LTM Holdings, Inc. (LTM) which provides for the combination of the
businesses of the Corporation and LTM. LTM is a private Delaware
corporation wholly-owned by Sony Pictures. The transaction will involve
combining the Corporation with the Loews Theatres Exhibition Group, which
consists of Sony/Loews Theatres and its joint ventures with Star Theatres
and Magic Johnson Theatres. It is proposed that the combined company will
be named Loews Cineplex Entertainment Corporation (LCE). LCE will have
over 2,600 screens in approximately 460 locations in North America.
Pursuant to a series of related transactions to be effected pursuant to a
Plan of Arrangement under the Business Corporations Act (Ontario), the
Corporation's shares will be exchanged for shares of LCE with the result
that the Corporation will become a wholly-owned subsidiary of LCE. Upon
closing of the transaction, Sony Pictures will own approximately 51.1% of
LCE's shares (representing 49.9% of LCE's voting shares); Universal
Studios, Inc. (Universal) will own approximately 26% of LCE's shares
(subsequent to a cash subscription of approximately $84.5 million); the
Charles Rosner Bronfman Family Trust and certain related parties (the
Bronfman Trust) will own approximately 9.6% of LCE's shares; and the
shareholders of the Corporation, other than Universal and the Bronfman
Trust, will own approximately 13.3% of LCE's shares. It is intended that
the LCE shares will be listed on the New York Stock Exchange and The
Toronto Stock Exchange.
The merger is subject to approval by the shareholders of the Corporation
and regulatory approval in both Canada and the United States. It is
anticipated that closing of this transaction will take place in
approximately five months.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operations for the nine months ended September 30, 1997
amounted to a net inflow of $4,552,000 compared to a net inflow of
$6,583,000 for the same period in 1996. Excluding the impact of the net
change in non-cash working capital, the Corporation's cash flow from
operations for the nine months ended September 30, 1997 amounted to a net
inflow of $11,507,000 compared to a net inflow of $9,610,000 for the same
period in 1996. The increase in cash flow resulted primarily from the
increase in revenue noted above.
In the first nine months of 1997 the Corporation opened five new theatre
locations (adding 45 new screens) and refurbished two theatre locations
(adding eight new screens). Management expects to open 14 new theatre
locations (adding 150 new screens) and refurbish a total of two theatres
(adding 15 new screens) during the fourth quarter of 1997 at an estimated
net cost of less than $25,000,000. The Corporation's current strategy is
to develop and build additional theatres and screens in target markets
that complement the Corporation's existing position in such markets or
that provide the Corporation with a strategic position in a newmarket.
Management is considering opportunities in international markets to
complement its existing theatre in Budapest, Hungary, although at this
stage it is premature to comment on either the possibility of further
international expansion or the potential magnitude of the Corporation's
capital commitment relating to its international expansion strategy. The
Corporation plans to fund its expansion programs by drawing on its bank
credit facilities and through internally generated cash flow. The
Corporation had approximately $28,300,000 available under its bank credit
facilities at September 30, 1997. As noted below, subsequent to
September 30, 1997 the Corporation was provided with an additional bank
facility of $20,600,000. Management believes that the availability under
the bank credit facilities is the primary indicator of the Corporation's
liquidity position.
At September 30, 1997 the Corporation's long-term debt was $354,334,000
compared to $326,058,000 at December 31, 1996. This increase is the
result of the capital expenditures incurred under the Corporation's
expansion program. Subsequent to September 30, 1997 the Corporation and
the banks participating in the bank credit facilities reached an
agreement whereby (i) the scheduled principal repayment of $10,000,000
due December 31, 1997 under the bank credit facilities will be deferred
until December 31, 1998; and (ii) an additional facility of $20,600,000
will be provided to the Corporation by the banks participating in the
bank credit facilities. This additional facility is subject to the same
interest rates as the remainder of the Corporation's bank credit
facilities and requires a principal repayment of $5,000,000 on December
31, 1998 with the balance maturing on December 31, 1999.
As at September 30, 1997, the Corporation was in compliance with the
financial covenants contained in its bank credit facilities. Given the
uncertainty with respect to the admission and concession revenues that
the Corporation will generate, there is a possibility that the
Corporation may not meet certain financial covenants in future periods.
The Corporation believes that the banking syndicate participating in the
bank credit facilities would waive the particular financial covenants if
the Corporation is not in compliance at a measurement date during the
next twelve month period.
RESULTS OF OPERATIONS
The Corporation reports its results in U.S. dollars. In order to
eliminate the impact of exchange rate fluctuations on the yearly
comparison of both admission and concession revenue, the results of the
Corporation's Canadian operations as discussed below are measured in
Canadian dollars.
The Corporation's United States theatres recorded a decrease in admission
revenue of 0.5% for the three months ended September 30, 1997 compared to
the same period in 1996. This admission revenue decrease was the result
of a 0.7% decrease in attendance and a 0.2% increase in box office
revenue per patron. For the nine months ended September 30, 1997 the
Corporation's United States theatres recorded an increase in admission
revenue of 1.2% compared to the same period in the prior year. This
increase was comprised of a decrease in attendance of 0.3% and an
increase in box office revenue per patron of 1.5%.
The Corporation's Canadian theatres reported an increase in admission
revenue of 12.2% (when measured in Canadian dollars) for the three months
ended September 30, 1997 compared to the same period in 1996. This
increase was the result of an increase in attendance of 11.4% and an
increase in box office revenue per patron of 0.8% over the same period in
1996. For the nine months ended September 30, 1997, the Corporation's
Canadian theatres reported an increase in admission revenue of 24.0% when
compared to the same period in the prior year. This increase was
comprised of a 19.7% increase in attendance and a 4.3% increase in box
office revenue per patron.
The increase in both the three and nine months attendance and admission
revenue in the Corporation's Canadian theatres in 1997 compared to the
same period in 1996 reflects the fact that films released by the
Corporation's primary film suppliers in Canada performed significantly
better during the first nine months of 1997 compared to films they
released during the same period in 1996. The Corporation obtains
licences to exhibit "first run" films primarily by directly negotiating
with film distributors. The Corporation has historical relationships
with certain Canadian film distributors and as a result is the major
exhibitor of pictures from these film distributors in that market.
The Corporation's United States concession revenue increased by 4.0% for
the three months ended September 30, 1997 compared to the same period in
1996. The attendance decrease of 0.7% experienced in the third quarter of
1997 was offset by an increase in concession revenue per patron of 4.7%.
For the nine months ended September 30, 1997 concession revenue for the
Corporation's United States theatres increased by 6.3%, when compared to
the same period in the prior year. This increase is attributable to the
attendance decrease of 0.3% and an increase in concession revenue per
patron of 6.6%.
The Corporation's Canadian concession revenue increased by 13.9% (when
measured in Canadian dollars) for the three months ended September 30,
1997 compared to the same period in 1996, reflecting the increase in
attendance of 11.4% and an increase in concession revenue per patron of
2.5%. For the nine months ended September 30, 1997 concession revenue for
the Corporation's Canadian theatres increased by 26.6%, when compared to
the same period in the prior year. This increase reflects an increase of
6.9% in concession revenue per patron accompanied by the increase in
attendance of 19.7%.
The increase in concession revenue per patron experienced in both the
Corporation's United States and Canadian theatres represents the impact
of management's concerted efforts in this area.
The gross margin from theatre operations (consisting of revenue from
theatre operations less film cost, cost of concessions, theatre
advertising, payroll, occupancy and supplies and services), when
expressed as a percentage of theatre operating revenue, decreased for the
three months ended September 30, 1997 to 16.3% from 17.2% for the same
period in 1996. For the nine months ended September 30, 1997 the gross
margin from theatre operations was 15.6% compared to 15.8% for the same
period in the prior year. The decrease in gross margin in the third
quarter of 1997 is directly attributable to the increased occupancy costs
associated with the Corporation's new theatres.
General and administrative expenses increased by 13.7% in the first nine
months of 1997 compared to the corresponding period in 1996. This
increase is the result of certain costs associated with the
infrastructure necessary for the Corporation's expansion program and
certain one-time charges.
Included in other expenses in the third quarter of 1997 is a charge of
approximately $5,300,000 associated with the cost of terminating leases
for a number of theatres. The selected review of the Corporation's
operating assets is a continuing process and has been intensified as a
result of the proposed combination with the Loews Theatres Exhibition
Group. This review of properties will be continued throughout the period
until the combination with the Loews Theatres Exhibition Group is
completed and consequently further leases may be terminated and certain
costs associated with such terminations incurred.
Interest on long-term debt decreased by 8.4% during the nine months ended
September 30, 1997 compared to the same period in 1996. This decrease is
primarily a result of the decision to denominate certain of the
Corporation's long-term debt in Canadian dollars which is subject to a
lower interest rate.
During 1997 the value of the Canadian dollar has weakened relative to the
United States dollar. While currency movements affect the reporting of
revenues and expenses of the Corporation's Canadian operations, the
financial impact is limited as the costs of operating the Canadian
theatres are supported by the revenue of such theatres.
FORWARD LOOKING STATEMENTS
The Corporation and its representatives have made, or may make, forward
looking statements including those contained in this Management's
Discussion and Analysis of Results of Operations and Financial Condition.
Use of the words "expects", "estimated", "plans", or similar expressions
identify such forward looking statements.
The results contemplated by the Corporation's forward looking statements
are subject to certain risks and uncertainties that could result in
actual performance being materially different from anticipated results,
including without limitation, lack of high quality commercial film
product, construction risks and delays, failure to obtain future waivers
or amendments under the Corporation's bank credit facilities and other
factors described herein.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
On or about October 14, 1997, a purported class action was commenced in
the United States District Court for the Northern District of Illinois
against the Corporation, Sony Corporation of America and Sony Retail
Entertainment by Jerrold I. Rosenthal, on his own behalf and on the
behalf of persons allegedly similarly situated. The complaint alleges
that if the business combination of the Corporation and LTM Holdings,
Inc. (the "Transaction") is consummated, Loews Cineplex Entertainment
Corporation ("LCE"), the combined company, will own sixty percent or more
of all movie theaters in the metropolitan Chicago area, and, as a
consequence (i) the Transaction would violate the federal and Illinois
antitrust statutes because the consummation of the Transaction would
allegedly tend to lessen substantially competition among and/or tend to
create a monopoly over movie theaters in the metropolitan Chicago area
and other, unspecified geographical areas and (ii) consummation of the
Transaction would allegedly injure Rosenthal and the members of the
purported class by resulting in higher prices for movie tickets and
limitations on the variety of movies exhibited. Rosenthal is seeking
injunctive relief regarding the Transaction under federal and Illinois
antitrust laws preventing consummation of the Transaction or, if the
Transaction is consummated, requiring divestiture, and also seeks
attorney fees and costs. Rosenthal has not claimed monetary damages.
Rosenthal is seeking to represent a purported class of "all patrons of
movie theaters in Chicago, Illinois and outlying areas" and other,
unspecified "similar" geographical areas elsewhere where LCE will own
sixty percent or more of all movie theaters upon consummation of the
Transaction. No motion for certification of the purported class has yet
been made. The Corporation believes that Rosenthal's allegations are
without merit and intends to oppose them vigorously.
The Corporation has been, and continues to be, involved in numerous other
legal proceedings. However, although such matters cannot be predicted
with certainty, the Corporation does not believe that such lawsuits are
likely to result in a judgment which would have a material adverse effect
on the Corporation's financial condition.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 10.1 Tenth Amendment Agreement dated as of November 7, 1997
by and among Cineplex Odeon Corporation, Plitt Theatres, Inc., the
Guarantors, the Bank of Nova Scotia as agent, and the Banks party
thereto.
(b) Exhibit 11.1 Statement re Computation of Per Share Earnings.
(c) Exhibit 27 Financial Data Schedule.
(d) The Corporation did not file any reports on Form 8-K during the quarter
ended September 30, 1997. On October 16, 1997 the Corporation filed a
Form 8-K in which it was reported that the Corporation, Sony Pictures
Entertainment Inc. and LTM Holdings, Inc. (LTM) have entered into an
agreement which provides for the combination of the businesses of the
Corporation and LTM.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
CINEPLEX ODEON CORPORATION
(Registrant)
Date November 13, 1997 Allen Karp
----------------- ------------------
Allen Karp
President and Chief
Executive Officer
Date November 13, 1997 Stephen Brown
----------------- ------------------
Stephen Brown
Senior Vice President
and Chief Financial Officer
<PAGE>
Commission File No. 1-9454
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
QUARTERLY REPORT ON FORM 10-Q
OF
CINEPLEX ODEON CORPORATION
For the Quarterly Period Ended September 30, 1997
<PAGE>
EXHIBIT INDEX
Exhibit Description
10.1 Tenth Amendment Agreement dated as of November 7, 1997
by and among Cineplex Odeon Corporation, Plitt Theatres, Inc.,
the Guarantors, the Bank of Nova Scotia as agent, and the Banks
party thereto.
11.1 Statement re Computation of Per Share Earnings.
27 Financial Data Schedule.
MODIFICATION NO. 12
THIS TENTH AMENDMENT AGREEMENT is made as of the 7th day of
November, 1997.
B E T W E E N:
CINEPLEX ODEON CORPORATION
a corporation incorporated under the
laws of the Province of Ontario
( Cineplex )
- - and -
PLITT THEATRES, INC.
a corporation incorporated under the
laws of the State of Delaware
( Plitt )
- - and -
CINEPLEX ODEON (QUEBEC) INC.
RKO CENTURY WARNER THEATRES, INC.
THE WALTER READE ORGANIZATION, INC.
PLITT SOUTHERN THEATRES, INC.
MANBECK THEATRE CORPORATION
(collectively, the Guarantors )
- - and -
THE BANK OF NOVA SCOTIA
NATIONAL BANK OF CANADA
THE BANK OF NEW YORK
ROYAL BANK OF CANADA
(collectively, the Banks )
- - and -
THE BANK OF NOVA SCOTIA
in its capacity as agent for the Banks
(the Agent )
- - and -
THE BANK OF NOVA SCOTIA
as operating lender
(the Operating Lender )
- - and -
THE BANK OF NOVA SCOTIA
in its capacity as Collateral Agent
(as defined in the Inter-Lender Agreement)
- - and -
THE BANK OF NOVA SCOTIA
in its capacity as Swap Lender
(as defined in the Inter-Lender Agreement)
- - and -
NATIONAL BANK OF CANADA
in its capacity as Swap Lender
(as defined in the Inter-Lender Agreement)
- - and -
796278 ONTARIO LIMITED
796279 ONTARIO LIMITED
619918 ONTARIO INC.
(the "Nominees")
WHEREAS:
A. Cineplex, Plitt, the Banks and the Agent entered into a credit
agreement dated as of 23 June 1994 pursuant to which the Banks
established a reducing/revolving term credit facility in favour of
Cineplex and Plitt, which agreement has been amended by a Waiver
Agreement made as of 25 October 1994, a Second Amendment Agreement made
as of 31 March 1995, a Second Waiver Agreement made as of 19 September
1995, a Third Amendment Agreement made as of 30 September 1995, a
Consent made as of 15 December 1995, a Fourth Amendment Agreement made
as of 9 February 1996, a Fifth Amendment Agreement made as of 26 March
1996, a Sixth Amendment Agreement made as of 16 August 1996, a Seventh
Amendment Agreement made as of 31 October 1996, an Eighth Amendment
Agreement made as of 17 February 1997 and a Ninth Amendment Agreement
made as of 18 April 1997 (such credit agreement as so amended and as
further supplemented, amended, restated or replaced from time to time,
the Credit Agreement ).
B. Cineplex and the Operating Lender entered into a letter loan
agreement dated 23 June 1994 (as the same may be amended, supplemented,
restated or replaced from time to time, the Operating Credit Agreement
) pursuant to which the Operating Lender established in favour of
Cineplex a revolving operating credit facility.
C. Pursuant to the Credit Agreement and the Operating Credit
Agreement, each of the Guarantors has provided a Guarantee.
D. Cineplex and Plitt have requested that (i) the Cineplex Banks enter
into this Agreement to provide Cineplex with a reducing/revolving term
credit facility in the maximum principal amount of U.S.$16,705,511.14
(or the Equivalent Amount in Cdn. Dollars), and (ii) the Plitt Banks
enter into this Agreement to provide Plitt with a reducing/revolving
term credit facility in the maximum principal amount of
U.S.$3,894,488.86, each such credit facility to be guaranteed by the
Guarantee and secured by the Security Documents and Collateral.
E. The Banks and the Operating Lender have agreed to such requests on
the terms set forth herein.
NOW THEREFORE in consideration of these premises and for other good
and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto
agree as follows:
Section 1 - Interpretation
Capitalized terms used herein, unless otherwise defined or
indicated herein, have the respective meanings ascribed thereto in the
Credit Agreement (as amended and supplemented hereby). Unless something
in the subject matter or context is inconsistent therewith, references
to "Agreement", "hereof", "herein", "hereto", "hereunder" or similar
expressions means this Tenth Amendment Agreement, as amended,
supplemented, restated or replaced from time to time. This Agreement
amends the Credit Agreement effective from and after the date hereof.
This Agreement and the Credit Agreement shall be read together and have
effect so far as practicable as though the provisions thereof and the
relevant provisions hereof are contained in one agreement.
Section 2 - Amendments to Definitions
Section 1.01 of the Credit Agreement is amended by adding the
following definitions in the order of the paragraph numbers as
indicated. In the case of any defined terms below (a "Replacement
Definition") which has the same paragraph number as an existing defined
term in the Credit Agreement (an "Existing Definition"), the Replacement
Definition substitutes and replaces the Existing Definition:
(j) "Available Commitment" means the aggregate of each Bank's
Commitment under the Cineplex Credit or Plitt Credit or Cineplex
Supplemental Credit or Plitt Supplemental Credit, as the case may be.
(l) "Bank's Proportion" means, the proportionate interest from
time to time of a Bank's Commitment under the Cineplex Credit or the
Plitt Credit or the Cineplex Supplemental Credit or the Plitt
Supplemental Credit, as the case may be, and expressed as a percentage,
the numerator of which is such Bank's Commitment under the Cineplex
Credit or the Plitt Credit or the Cineplex Supplemental Credit or the
Plitt Supplemental Credit, as the case may be, and the denominator of
which is the then Available Commitment under the Cineplex Credit or the
Plitt Credit or the Cineplex Supplemental Credit or the Plitt
Supplemental Credit, as the case may be.
(l.1) "Bank s Aggregate Proportion" means the proportionate
interest from time to time of a Bank s aggregate Commitments under the
Cineplex Credit, the Plitt Credit, the Cineplex Supplemental Credit and
the Plitt Supplemental Credit, and expressed as a percentage, the
numerator of which is such Bank s aggregate Commitments under the
Cineplex Credit, the Plitt Credit, the Cineplex Supplemental Credit and
the Plitt Supplemental Credit and the denominator of which is the
aggregate of the Available Commitments of each of the Banks under the
Cineplex Credit, the Plitt Credit, the Cineplex Supplemental Credit and
the Plitt Supplemental Credit.
(p) "Base Rate Advance" means an Advance in U.S. Dollars under
the Cineplex Credit or Plitt Credit or Cineplex Supplemental Credit or
Plitt Supplemental Credit, as the case may be, bearing interest as
provided in Section 4.03 hereof and includes a deemed Base Rate Advance
as provided for in Sections 4.04, 4.07 and 11.04 hereof.
(r) "Borrowing" means any or all utilizations of the Cineplex
Credit or Cineplex Supplemental Credit by Cineplex or the Plitt Credit
or Plitt Supplemental Credit by Plitt, as the case may be, (including a
conversion or rollover) consisting of a Prime Rate Borrowing, a Base
Rate Borrowing, a LIBO Borrowing, the acceptance by each Cineplex Bank
of one or more Bankers' Acceptances, or, in the case of the Cineplex
Credit and Plitt Credit, the issue by the Issuing Bank for and on behalf
of each Cineplex Bank or Plitt Bank, as the case may be, of a Letter of
Credit on behalf of Cineplex or Plitt, as the case may be, or any
combination thereof.
(z) "Cineplex Banks" means The Bank of Nova Scotia, National
Bank of Canada and Royal Bank of Canada together with such other Banks
as become parties hereto pursuant to Section 12.05 hereof and who agree
to provide a Commitment under the Cineplex Credit or Cineplex
Supplemental Credit.
(aa.1) "Cineplex Supplemental Credit" means the credit facility
provided for in Subsection 3A.01(a) hereof upon and subject to the terms
of this Agreement.
(dd) "Commitment" means (i) in respect of the Cineplex Credit and
the Plitt Credit, the several obligation of each Cineplex Bank to make
available to Cineplex or the several obligation of each Plitt Bank to
make available to Plitt its portion of the Cineplex Credit or the Plitt
Credit, as the case may be, as at the date of execution hereof as
specified below that Bank's name on the signature pages to this
Agreement as reduced from time to time pursuant to Sections 3.10, 3.11,
3.12, 3.13 or 3.14 hereof, and (ii) in respect of the Cineplex
Supplemental Credit and Plitt Supplemental Credit, the several
obligation of each Cineplex Bank to make available to Cineplex or the
several obligation of each Plitt Bank to make available to Plitt its
portion of the Cineplex Supplemental Credit or the Plitt Supplemental
Credit, as the case may be, as at 7 November 1997, as specified opposite
that Bank's name as follows, as reduced from time to time pursuant to
Sections 3A.05, 3A.06 and 3A.07 hereof:
Cineplex Supplemental Credit
Bank Commitment
The Bank of Nova Scotia
U.S.$10,029,244.52
National Bank of Canada
U.S.$ 3,894,488.86
Royal Bank of Canada
U.S.$ 2,781,777.76
Plitt Supplemental Credit
Bank Commitment
The Bank of New York
U.S.$ 3,894,488.86
(hh) "Credits" means collectively the Cineplex Credit, the Plitt
Credit, the Cineplex Supplemental Credit and the Plitt Supplemental
Credit and "Credit" means any one of them, as the case may be.
(fff) "LIBO Advance" means an Advance in U.S. Dollars under the
Cineplex Credit or Plitt Credit or Cineplex Supplemental Credit or Plitt
Supplemental Credit, as the case may be, bearing interest as provided
for in Section 4.04 hereof and includes a deemed LIBO Advance as
provided for in Section 4.04 hereof.
(qqq.1) "Original Credits" means collectively the Cineplex Credit
and the Plitt Credit and "Original Credit" means either one of them, as
the case may be.
(zzz) "Plitt Banks" means The Bank of New York together with such
other Banks as become parties hereto pursuant to Section 12.05 hereof
and who agree to provide a Commitment under the Plitt Credit or Plitt
Supplemental Credit.
(aaaa.1) "Plitt Supplemental Credit" means the credit
facility provided for in Subsection 3A.01(b) hereof upon and subject to
the terms of this Agreement.
(cccc) "Prime Rate Advance" means an Advance in Canadian Dollars
under the Cineplex Credit or Cineplex Supplemental Credit bearing
interest as provided for in Section 4.02 hereof and includes a deemed
Prime Rate Advance as provided for in Subsection 4.05(f) and Sections
4.07 and 11.04 hereof.
(tttt.1) "Supplemental Credits" means collectively the
Cineplex Supplemental Credit and the Plitt Supplemental Credit and
"Supplemental Credit" means either one of them, as the case may be.
Section 3 - Addition of New Facilities
The Credit Agreement is amended by adding the following after Article
Three:
"ARTICLE THREE A
SUPPLEMENTAL CREDIT FACILITIES
Section 3A.01
Maximum Amount of the Supplemental Credits;: Subject always to the
limitations and terms and conditions contained herein:
(a)The Cineplex Banks agree to provide to Cineplex a
reducing/revolving credit facility (the "Cineplex Supplemental Credit")
in the maximum principal amount of U.S.$16,705,511.14 or in an
Equivalent Amount in Canadian Dollars. The Cineplex Supplemental Credit
is to be used by Cineplex to finance the buy-out of leases relating to
twenty-two (22) theatre properties listed in Exhibit 1 annexed hereto or
such other properties as may be approved by the Majority Lenders.
(b)The Plitt Banks agree to provide to Plitt a reducing/revolving
credit facility (the "Plitt Supplemental Credit") in the maximum
principal amount of U.S.$3,894,488.86. The Plitt Supplemental Credit is
to be used by Plitt to finance the buy-out of leases relating to twenty-
two (22) theatre properties listed in Exhibit 1 annexed hereto or such
other properties as may be approved by the Majority Lenders.
(c)Each of the Supplemental Credits shall be available in two
tranches. One-half of each Supplemental Credit (the "First Tranche")
shall be available, subject to the terms and conditions set forth in
this Agreement, immediately upon the Supplemental Credits being
established. The availability of the remaining half of each
Supplemental Credit (the "Second Tranche") shall be subject, in addition
to the other terms and conditions set forth in this Agreement, to
Cineplex and Plitt having entered into, on or before June 30, 1998,
binding and enforceable agreements with Sony Pictures Entertainment Inc.
to complete the proposed merger of Cineplex and Plitt with Sony's Loews
Theatre chain, on terms satisfactory to the Majority Banks acting
reasonably (the "Second Tranche Condition Precedent"), failing which the
Second Tranche shall be cancelled on such date and the amounts of the
Supplemental Credits shall be permanently reduced accordingly. Cineplex
and Plitt shall provide to the Banks all information and documents
relating to the proposed merger as may be requested by the Banks.
Section 3A.02
Nature of the Supplemental Credits
(a) Subject to the terms of Sections 3A.06 and 3A.07, the
Cineplex Supplemental Credit revolves during its entire term so that the
principal amount of any Advances comprising any Borrowing under the
Cineplex Supplemental Credit may be repaid and shall thereafter again
become available to Cineplex under the Cineplex Supplemental Credit and
the principal amount of any Bankers' Acceptances forming part of any
Borrowing under the Cineplex Supplemental Credit which mature and are
satisfied by Cineplex on the date of their maturity shall thereafter
again become available to Cineplex under the Cineplex Supplemental
Credit, all in accordance with the terms of this Agreement; and
(b) Subject to the terms of Sections 3A.06 and 3A.07, the Plitt
Supplemental Credit revolves during its entire term so that the
principal amount of any Base Rate Advances or LIBO Advances comprising
any Borrowing under the Plitt Supplemental Credit may be repaid and
shall thereafter again become available to Plitt under the Plitt
Supplemental Credit, all in accordance with the terms of this Agreement.
If either Cineplex or Plitt makes a repayment under the Cineplex
Supplemental Credit or Plitt Supplemental Credit, Cineplex and Plitt
agree that the other will make a repayment at the same time under the
Cineplex Supplemental Credit or Plitt Supplemental Credit, as the case
may be, and each repayment will be made such that the Cineplex
Supplemental Credit and the Plitt Supplemental Credit are reduced on a
pro rata basis, based on the initial Available Commitment under the
Cineplex Supplemental Credit and the Plitt Supplemental Credit.
Section 3A.03
Availment Options
(a) Upon the terms and conditions of this Agreement and
specifically subject to Paragraphs (c), (d) and (e) hereof, each
Cineplex Bank agrees to provide its Bank's Proportion under the Cineplex
Supplemental Credit. The Cineplex Supplemental Credit may be used by
Cineplex, either (i) by requesting a Prime Rate Borrowing, (ii) by
requesting a Base Rate Borrowing, (iii) by requesting a LIBO Borrowing,
(iv) by presenting drafts for acceptance as Bankers' Acceptances or (v)
any combination thereof.
(b) Upon the terms and conditions of this Agreement and
specifically subject to Paragraphs (c), (d) and (e) hereof, each Plitt
Bank agrees to provide its Bank's Proportion under the Plitt
Supplemental Credit. The Plitt Supplemental Credit may be used by
Plitt, either (i) by requesting a Base Rate Borrowing, (ii) by
requesting a LIBO Borrowing or (iii) any combination thereof.
(c) Subject to Sections 4.03 and 4.04, each of Cineplex and Plitt
agree that they will each severally request or convert a Borrowing under
the Supplemental Credits on the same day as the other requests or
converts a Borrowing under the Supplemental Credits and that the
aggregate of such Borrowings shall be divided on a pro rata basis
between the Cineplex Supplemental Credit and the Plitt Supplemental
Credit based on the Available Commitments under the Cineplex
Supplemental Credit and the Plitt Supplemental Credit.
(d) Subject to Section 4.04, each of Cineplex and Plitt agree
that if either of them requests or converts a LIBO Borrowing under the
Supplemental Credits, the other will agree to request or convert a LIBO
Borrowing under the Supplemental Credits in its pro rata share for the
same Interest Period.
(e) Subject to Section 4.04, each of Cineplex and Plitt agree
that if Cineplex requests or converts to a Borrowing under the Cineplex
Supplemental Credit by way of Bankers' Acceptances, Plitt shall request
or convert to a LIBO Borrowing under the Plitt Supplemental Credit in
its pro rata share for an Interest Period equal to the term to maturity
of such Bankers' Acceptances.
Section 3A.04
Minimum Amounts:
Each Prime Rate Borrowing requested under the Supplemental Credits shall
be in a minimum principal amount of Cdn.$500,000 and in a whole multiple
of Cdn.$100,000 thereafter, each Base Rate Borrowing requested under the
Supplemental Credits shall be in a minimum principal amount of
U.S.$500,000 and in a whole multiple of U.S.$100,000 thereafter and each
LIBO Borrowing requested under the Supplemental Credits shall be in a
minimum principal amount of U.S.$3,000,000 and in a whole multiple of
U.S.$100,000 thereafter.
Where a Borrowing is requested under the Cineplex Supplemental Credit by
way of Bankers' Acceptances, the minimum aggregate principal amount of
such Borrowing shall be Cdn.$3,000,000 and each draft presented for
acceptance by a Cineplex Bank as a Bankers' Acceptance shall be in a
minimum principal amount of Cdn.$100,000 and whole multiples of
Cdn.$100,000 thereafter.
Section 3A.05
Voluntary Reduction of Unused Available Commitment
(a) The unused portion of the Available Commitment under the
Cineplex Supplemental Credit may be permanently reduced or cancelled
without penalty, in inverse order of maturity, at any time in a minimum
principal amount of U.S.$3,000,000 and whole multiples of U.S.$100,000
thereafter by Cineplex by giving to the Agent irrevocable written notice
at least five (5) Business Days prior to the date of such permanent
reduction or cancellation specifying the date for and the amount of such
permanent reduction or cancellation. The Agent shall promptly notify
each Cineplex Bank of the date and amount of such permanent reduction or
cancellation of the Available Commitment under the Cineplex Supplemental
Credit and the Commitment under the Cineplex Supplemental Credit of each
Cineplex Bank shall be irrevocably reduced accordingly in each Bank's
Proportion under the Cineplex Supplemental Credit; and
(b) The unused portion of the Available Commitment under the
Plitt Supplemental Credit may be permanently reduced or cancelled
without penalty, in inverse order of maturity, at any time in a minimum
principal amount of U.S.$1,000,000 and whole multiples of U.S.$100,000
thereafter by Plitt by giving to the Agent irrevocable written notice at
least five (5) Business Days prior to the date of such permanent
reduction or cancellation specifying the date for and the amount of such
permanent reduction or cancellation. The Agent shall promptly notify
each Plitt Bank of the date and amount of such permanent reduction or
cancellation of the Available Commitment under the Plitt Supplemental
Credit and the Commitment under the Plitt Supplemental Credit of each
Plitt Bank shall be irrevocably reduced accordingly in each Bank's
Proportion under the Plitt Supplemental Credit.
If either Cineplex or Plitt make a voluntary reduction of a
Supplemental Credit, Cineplex and Plitt agree that the other will make a
voluntary reduction at the same time under the Cineplex Supplemental
Credit or Plitt Supplemental Credit, as the case may be, and each
voluntary reduction will be made such that the Cineplex Supplemental
Credit and the Plitt Supplemental Credit are reduced on a pro rata
basis, based on the initial Available Commitment under the Cineplex
Supplemental Credit and the Plitt Supplemental Credit.
Section 3A.06
Mandatory Reductions and Prepayments of the Supplemental Credits
(a) The aggregate maximum amount of the Available Commitments
under the Supplemental Credits shall be permanently reduced on December
31, 1998 by:
(I) U.S.$5,000,000, if the Second Tranche Condition Precedent
has been satisfied; or
(ii) U.S.$2,500,000, if the Second Tranche Condition Precedent
has not been satisfied.
Such reduction shall be applied in reduction of the Available
Commitments under the Cineplex Supplemental Credit and Plitt
Supplemental Credit on a pro rata basis based on the initial Available
Commitments under the Cineplex Supplemental Credit and the Plitt
Supplemental Credit. Cineplex, in the case of the Cineplex Supplemental
Credit, and Plitt, in the case of the Plitt Supplemental Credit, shall
make any payment required by such reduction to the Agent on behalf of
the Cineplex Banks or the Plitt Banks, as the case may be, such that
Aggregate Outstandings under the Cineplex Supplemental Credit or Plitt
Supplemental Credit, as the case may be, do not exceed the Available
Commitment under the Cineplex Supplemental Credit or Plitt Supplemental
Credit, as the case may be, as so reduced.
(b) On December 31, 1999, the Supplemental Credits and the
Available Commitments of all of the Banks with respect thereto shall be
extinguished and all amounts of any kind or nature whatsoever owing to
any of the Banks or the Agent under or in connection with the
Supplemental Credits by virtue of this Agreement shall be paid in full.
Section 3A.07
Additional Mandatory Reductions: The amounts referred to in Sections
3.12, 3.13 and 3.14 to be applied in permanent reduction of the
Available Commitments under the Cineplex Credit and the Plitt Credit
shall, upon the Available Commitments under the Cineplex Credit and the
Plitt Credit being reduced to nil, be applied in permanent reduction of
the Available Commitments under the Cineplex Supplemental Credit and
Plitt Supplemental Credit on a pro rata basis, based on the initial
Available Commitments under the Cineplex Supplemental Credit and Plitt
Supplemental Credit. Such reductions will be applied in inverse order
of maturity. Cineplex, in the case of the Cineplex Supplemental Credit,
and Plitt, in the case of the Plitt Supplemental Credit, shall make any
payments required by such reductions to the Agent on behalf of the
Cineplex Banks or the Plitt Banks, as the case may be, such that
Aggregate Outstandings under the Cineplex Supplemental Credit or Plitt
Supplemental Credit, as the case may be, do not exceed the Available
Commitments under the Cineplex Supplemental Credit or Plitt Supplemental
Credit, as the case may be, as so reduced.
Section 3A.08
Stand-by Fee: On the tenth day following the last day of March, June,
September and December in each year and on the Maturity Date (or in each
case if such day is not a Business Day, the immediately preceding
Business Day), Cineplex or Plitt, as the case may be, shall be liable to
pay and shall pay to the Agent, for the account of each Cineplex Bank or
Plitt Bank, as the case may be, in its Bank's Proportion under the
Cineplex Supplemental Credit or Plitt Supplemental Credit, as the case
may be, in U.S. Dollars at the Agent's Branch of Account a stand-by fee
in an amount equal to 1/2% per annum calculated on the daily average
unused portion from time to time of the Available Commitments under the
Cineplex Supplemental Credit or Plitt Supplemental Credit, as the case
may be (including, for greater certainty, the Second Tranche whether or
not then available to Cineplex or Plitt until cancelled). The Agent
shall promptly distribute such payment to each Cineplex Bank or Plitt
Bank, as the case may be, in its Bank's Proportion under the Cineplex
Supplemental Credit or Plitt Supplemental Credit, as the case may be.
Such stand-by fee shall accrue from day to day from and including the
date the Supplemental Credits are established, shall be payable in
arrears for the actual number of days elapsed and shall be calculated on
the basis of a calendar year.
Section 3A.09
Up-Front Fees: Non-refundable fees in an aggregate amount of US$343,930
divided and payable pro rata amongst the Cineplex Banks and Plitt Banks
in accordance with the proportion each such Bank s Commitment in respect
of the Supplemental Credits bears in relation to the Available
Commitments in respect of the Supplemental Credits, have been paid to
such Banks.
Section 3A.10
Applicability of Article Three to Supplemental Credits: Sections
3.05, 3.06, 3.07, 3.08, 3.09, 3.18, 3.19, 3.20 and 3.21 shall apply
mutatis mutandis to the Supplemental Credits as if each reference
therein to the Cineplex Credit was a reference to the Cineplex
Supplemental Credit and each reference therein to the Plitt Credit was a
reference to the Plitt Supplemental Credit, except that neither Cineplex
nor Plitt shall have the right to request or convert to a Borrowing by
way of Letter of Credit. Unless something in the subject matter or
context is inconsistent therewith, the Agent and the Banks in respect of
the Supplemental Credits shall have the benefits of all of the covenants
and conditions and representations and warranties contained in this
Agreement."
Section 5 - Consequential Amendments
(a) Section 4.04 of the Credit Agreement is amended by (i)
inserting after each reference therein to "Section 3.03", the words "or
Section 3A.03, as applicable,", (ii) inserting the following sentence at
the end of the sixth paragraph of Section 4.04: "The Interest Period
for any LIBO Advance under the Supplemental Credits shall not extend
beyond the Maturity Date or the date of any reduction of the Available
Commitment as provided in Sections 3A.06 or 3A.07 so as to prevent any
repayment of a required amount on its due date", and (iii) inserting
after the reference in the eighth paragraph of Section 4.04 to the
"Plitt Credit", the words "or Cineplex Supplemental Credit or Plitt
Supplemental Credit".
(b) Subsection 4.05(b) of the Credit Agreement is amended by (i)
inserting after the reference therein to "Section 3.14", the words "and
no Bankers' Acceptance issued under the Cineplex Supplemental Credit may
mature on a date later than the Maturity Date or so as to prevent any
repayment of a required amount on the due date as provided in Sections
3A.06 or 3A.07", and (ii) inserting after the reference in the second
sentence to "Cineplex Credit", the words "or Cineplex Supplemental
Credit, as applicable, except that a Bankers Acceptance under the
Cineplex Supplemental Credit may not be converted into a Letter of
Credit".
(c) Subsections 4.05(c) and 4.05(f) of the Credit Agreement are
amended by inserting after each reference therein to "Cineplex Credit",
the words "or Cineplex Supplemental Credit, as the case may be,".
(d) Sections 6.03, 10.03, 11.01 and 11.04 of the Credit Agreement
are amended by inserting after each reference therein to "Plitt Credit",
the words "or Cineplex Supplemental Credit or Plitt Supplemental
Credit".
(e) Subsection 1.01 (pp)(vi) of the Credit Agreement is amended by
inserting after the reference therein to "3.17", the words "and 3A.09".
(f) Section 3.02 of the Credit Agreement is amended by inserting
after the word "repayment" in the first line of the last paragraph
thereof, the words "under the Cineplex Credit or Plitt Credit".
(g) Section 3.03 of the Credit Agreement is amended by (i)
inserting after each reference in Subsections (d) and (e) thereof to
"Borrowing", the words "under the Original Credits", (ii) inserting
after the reference to "Borrowing" in the second line of Subsection (f)
thereof, the words "under the Cineplex Credit", and (iii) inserting
after the reference to "LIBO Borrowing" in Subsection (f) thereof, the
words "under the Plitt Credit".
(h) Section 3.04 of the Credit Agreement is amended by (i)
inserting after each reference in the first paragraph thereof to
"requested", the words "under the Original Credits", and (ii) inserting
after the reference in the second paragraph thereof to "requested", the
words "under the Cineplex Credit".
(i) Section 3.10 of the Credit Agreement is amended by inserting after
the word "reduction" in the first line of the last paragraph thereof,
the words "under the Cineplex Credit or Plitt Credit".
(j) The heading of Section 6.02 of the Credit Agreement is amended
by deleting the word "either" and replacing it with "any".
(k) Section 10.08 of the Credit Agreement is amended by (i)
deleting each reference therein to "Bank s Proportion", and replacing it
with reference to "Bank s Aggregate Proportion", and (ii) deleting the
words "under the Cineplex Credit or Plitt Credit, as the case may be,"
as they appear immediately following the second reference in such
Section to "Bank s Proportion".
(l) Section 10.09 of the Credit Agreement is amended so that it
reads as follows:
"Section 10.09 Sharing Among the Banks: The Cineplex Banks and Plitt
Banks agree among themselves that, except as otherwise provided for in
this Agreement:
(a) All sums received by a Cineplex Bank or Plitt Bank, as
the case may be, relating to this Agreement or by virtue of the Security
Documents whether received by voluntary payment, by the exercise of the
right of set-off or compensation or by counterclaim, cross-action or as
proceeds of realization of any security or otherwise, shall be divided
and applied pro rata between the Original Credits and the Supplemental
Credits, based upon the Aggregate Outstandings under the Original
Credits and the Aggregate Outstandings under the Supplemental Credits.
(b) The amounts applied to the Original Credits pursuant to
Section 10.09(a) above shall be divided and applied between the Cineplex
Credit and the Plitt Credit so that the Aggregate Outstandings under
each of the Cineplex Credit and the Plitt Credit will be, after
distribution of such amounts, in the same proportions to each other as
the initial Available Commitments under each such Credit are to the
other. The amounts applied to the Supplemental Credits pursuant to
Section 10.09(a) above shall be divided and applied between the Cineplex
Supplemental Credit and the Plitt Supplemental Credit so that the
Aggregate Outstandings under each of the Cineplex Supplemental Credit
and the Plitt Supplemental Credit will be, after distribution of such
amounts, in the same proportions to each other as the initial Available
Commitments under each such Credit are to the other.
(c) The amounts applied to each of the Credits pursuant to
Section 10.09(b) above shall be shared by each Cineplex Bank or Plitt
Bank, as the case may be, so that the Aggregate Outstandings of each
such Bank under such Credit will be, after distribution of such amounts,
in each such Bank s Proportion under such Credit.
(d) Each Cineplex Bank and Plitt Bank undertakes to do all
such things as may be reasonably required to give full effect to this
Section 10.09."
(n) The Credit Agreement is amended by adding as Exhibit 1 to the
Credit Agreement, Exhibit 1 attached hereto.
(o) Schedules "O" and "U" to the Credit Agreement shall apply,
with the necessary modifications, to drawdowns and assignments,
respectively, in respect of the Supplemental Credits. Cineplex and
Plitt shall specify in each notice of drawdown the Credit under which
the Borrowing is requested.
Section 6 - Confirmations With Respect to Guarantees and Security
Documents
(a) Cineplex, Plitt and each of the Guarantors confirms and agrees
that (i) the defined term "Guaranteed Liabilities" in each of the
Guarantee dated 23 June 1994 executed by Cineplex (the "Cineplex
Guarantee") and the Guarantee dated 15 December 1995 executed by
Cineplex Quebec (the "Cineplex Quebec Guarantee") includes, in the case
of the Cineplex Guarantee, the obligations from time to time of Plitt
in respect of the Plitt Supplemental Credit and, in the case of the
Cineplex Quebec Guarantee, the obligations from time to time of Cineplex
(A) in respect of the Cineplex Supplemental Credit and (B), pursuant to
the Cineplex Guarantee, in respect of the Plitt Supplemental Credit, and
(ii) the defined terms "Secured Obligations", "Obligations Secured" or
"Obligations" (as used to define the obligations secured by each
Security Document) in the Security Documents executed by Cineplex and
Cineplex Quebec includes, in the case of the Security Documents executed
by Cineplex, the obligations from time to time of Cineplex in respect of
the Cineplex Supplemental Credit and the "Guaranteed Liabilities" under
the Cineplex Guarantee described in (i) above and, in the case of the
Security Documents executed by Cineplex Quebec, the "Guaranteed
Liabilities" under the Cineplex Quebec Guarantee described in (i) above.
(b) Cineplex, Plitt and each of the Guarantors confirms and agrees
that (i) the term "Guaranteed Obligations" in each of the Guarantee
dated 23 June 1994 executed by Plitt (the "Plitt Guarantee") and the
Guarantee dated 23 June 1994 executed by RKO Century Warner Theatres,
Inc., The Walter Reade Organization, Inc., Plitt Southern Theatres, Inc.
and Manbeck Theatre Corporation (collectively, the "U.S. Subsidiaries")
(the "U.S. Subsidiaries Guarantee") includes, in the case of the Plitt
Guarantee, the obligations from time to time of Cineplex in respect of
the Cineplex Supplemental Credit and, in the case of the U.S.
Subsidiaries Guarantee, the obligations from time to time of Cineplex
and Plitt in respect of the Cineplex Supplemental Credit and Plitt
Supplemental Credit, respectively, and (ii) the defined term "Secured
Obligations" in the Security Documents executed by Plitt and the U.S.
Subsidiaries includes, in the case of the Security Documents executed by
Plitt, the obligations from time to time of Plitt in respect of the
Plitt Supplemental Credit and the "Guaranteed Obligations" under the
Plitt Guarantee described in (i) above and, in the case of the Security
Documents executed by the U.S. Subsidiaries, the "Guaranteed
Obligations" under the U.S. Subsidiaries Guarantee described in (i)
above.
(c) The foregoing shall not limit or restrict in any way the
Guarantees or Security Documents referred to in (a) and (b) above.
Section 7 - Confirmation With Respect to Inter-Lender Agreement
The parties confirm and agree that the defined term "Aggregate
Secured Obligations" in the inter-lender and collateral agency agreement
dated 23 June 1994 amongst certain of the parties hereto (the "Inter-
Lender Agreement") includes the obligations of Cineplex and Plitt from
time to time in respect of the Cineplex Supplemental Credit and Plitt
Supplemental Credit and such obligations shall be secured pari passu by
the Joint Security (as defined in the Inter-Lender Agreement) with the
other Aggregate Secured Obligations in accordance with the terms of the
Inter-Lender Agreement.
Section 8 - Deferral of Mandatory Reductions of Cineplex Credit and
Plitt Credit
The reductions of the aggregate amounts of the Available
Commitments under the Cineplex Credit and Plitt Credit on December 31,
1997 in the amounts of U.S.$7,878,787.88 and U.S.$2,121,212.12,
respectively, pursuant to Section 3.11 of the Credit Agreement, shall be
deferred to December 31, 1998, subject to fulfilment on or before
December 31, 1997, of the condition precedent that Cineplex and Plitt
shall have entered into binding and enforceable agreements with Sony
Pictures Entertainment Inc. to complete the proposed merger of Cineplex
and Plitt with Sony s Loews Theatre chain, on terms satisfactory to the
Majority Banks acting reasonably.
Section 9 - Conditions Precedent to Effectiveness of this Amendment
Agreement
This Tenth Amendment Agreement shall only become effective and
binding on the Agent, the Banks, the Collateral Agent, the Swap Lenders
and the Operating Lender upon satisfaction of the following conditions
precedent:
(a) Agreement: The Agent shall have received this Agreement
executed by Cineplex, Plitt, the Guarantors, the Nominees, the Agent,
the Collateral Agent, the Swap Lenders, the Operating Lender and each
Bank.
(b) Legal Opinion of Counsel to Cineplex, Plitt and the Restricted
Subsidiaries: The Agent shall have received opinions of Canadian and
U.S. counsel to Cineplex, Plitt and the Restricted Subsidiaries and
addressed to the Agent, the Banks and the Banks' counsel, in the form
and substance of the opinions agreed upon between the parties hereto.
(c) Corporate Proceedings of Cineplex, Plitt and the Restricted
Subsidiaries: The Agent shall have received, certified by a Responsible
Officer or the Secretary of Cineplex, Plitt or the Restricted
Subsidiaries, as the case may be:
(i) documents representing corporate action taken by
Cineplex, Plitt and the Restricted Subsidiaries authorizing the
execution, delivery and performance of this Agreement and all other
documents required to be executed and delivered by Cineplex, Plitt and
the Restricted Subsidiaries hereunder;
(ii) copies of the charter documents, the general borrowing
by-law (if any) and an extract of the relevant execution of documents
provisions of the by-laws of Cineplex, Plitt and the Restricted
Subsidiaries, or a certificate certifying that such documents previously
delivered to the Agent are in full force and effect, unamended and that
no proceedings have been taken or are pending to amend, surrender or
cancel same; and
(iii) a certificate as to the incumbency and signature of
the officers of Cineplex, Plitt and the Restricted Subsidiaries
executing on behalf of Cineplex, Plitt and the Restricted Subsidiaries
this Agreement and any certificate or other document to be delivered
pursuant hereto.
(d) Hypothec Amendments: The Agent shall have received
modification and amendment agreements with respect to each of the deeds
of movable hypothec previously granted by Cineplex and Cineplex Quebec,
duly executed by Cineplex and Cineplex Quebec, in the form and substance
agreed upon between the parties hereto.
(e) Other Documents: The Agent shall have received such other
documents as the Banks may reasonably require.
All documents, agreements and opinions shall be in form and substance
satisfactory to the Agent and the Banks.
Section 10 - Representations and Warranties
To induce the Agent, the Banks, the Collateral Agent, the Swap
Lenders and the Operating Lender to enter into this Agreement, Cineplex
and Plitt hereby make the following representations and warranties to
each of the Banks, the Agent, the Collateral Agent, the Swap Lenders and
the Operating Lender:
(a) Corporate Existence: Cineplex, Plitt, and each Restricted
Subsidiary is a corporation duly incorporated, organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation.
(b) Power; Authorization; Enforceable Obligations: Cineplex,
Plitt and each Restricted Subsidiary has the power and authority and the
legal right to make, deliver and perform this Agreement and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Agreement. Except to the extent that non-compliance
would not affect materially the ability of Cineplex, Plitt or any
Restricted Subsidiary to perform its obligations under this Agreement,
no consent or authorization of, filing with, or other act by or in
respect of any Governmental Authority, is required in connection with
the execution, delivery, performance, validity or enforceability of this
Agreement. This Agreement has been duly executed and delivered on
behalf of Cineplex, Plitt and each such Restricted Subsidiary and
constitutes a legal, valid and binding obligation of Cineplex, Plitt and
each such Restricted Subsidiary, enforceable against such party in
accordance with its terms subject to applicable laws relating to
bankruptcy, insolvency and other similar laws affecting creditors'
rights generally and to the fact that specific performance and other
equitable remedies are subject to the discretion of a court.
(c) No Legal Bar: The execution, delivery and performance of this
Agreement will not violate any Requirement of Law or any material
Contractual Obligation of Cineplex, Plitt or any Restricted Subsidiary
except to the extent that any such violation would not adversely affect
the ability of Cineplex or Plitt to perform its obligations hereunder
and does not result in, or require, the creation or imposition of any
Lien in violation of the provisions of Section 8.02 of the Credit
Agreement on any of the properties or revenues of Cineplex, Plitt or any
Restricted Subsidiary pursuant to any Requirement of Law or Contractual
Obligation.
(d) No Material Litigation: Except as disclosed to the Agent and
the Banks in writing prior to the date of this Agreement and accepted by
the Agent and the Banks, no material litigation, investigation or
proceeding of or before an arbitrator or Governmental Authority is
pending or, to the knowledge of Cineplex or Plitt or after due and
diligent investigation, threatened against Cineplex, Plitt, any
Subsidiary or any Related Party or against any of its or their
properties or revenues which if decided against Cineplex, Plitt, any
Subsidiary or any Related Party could have a material adverse effect on
the business, affairs or operations of Cineplex on a consolidated basis
or with respect to this Agreement, the Credit Agreement or any of the
Security Documents or any of the transactions contemplated hereby or
thereby.
(e) No Default: Except as disclosed to the Agent and the Banks in
writing prior to the date of this Agreement and accepted by the Agent
and the Banks, neither Cineplex, Plitt, any Subsidiary nor any Related
Party is in default under or with respect to any Contractual Obligation
in any respect which would be materially adverse to the consolidated
business, operations, property or financial or other condition of
Cineplex or which would materially and adversely affect Cineplex's,
Plitt's or any Restricted Subsidiary's ability to perform its
obligations under this Agreement, the Credit Agreement or any of the
Security Documents. All of the representations and warranties contained
in the Credit Agreement and the Security Documents are true and correct
on the date hereof as if made on the date hereof and no Default or Event
of Default has occurred and is continuing or will result from the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
(f) U.S. Federal Reserve Regulations: No part of the proceeds of
the Cineplex Supplemental Credit or the Plitt Supplemental Credit will
be used, either directly or indirectly, for "purchasing" or "carrying"
"margin stock" within the respective meanings of each of the quoted
terms under Regulation U of the Board of Governors of the Federal
Reserve System of the United States of America as now and from time to
time hereafter in effect or for any purpose which violates, or which
would be inconsistent with, the provisions of the Regulations of such
Board of Governors.
(g) Violation of Agreements: None of the execution and delivery
of this Agreement, the consummation or implementation of the
transactions contemplated thereby, nor compliance with or performance of
the terms and conditions thereof: (i) conflicts with, results in a
breach or violation of, or constitutes a default under any of the terms,
conditions or provisions of the Senior Subordinated Indenture or the
intercreditor agreement dated 23 June 1994 by and among Coca-Cola
Financial Corporation and The Bank of Nova Scotia, acting in various
capacities (the "Coca-Cola Agreement"), or (ii) requires any consent or
authorization of, or notification to or filing with, or other act by or
in respect of any person under the Senior Subordinated Indenture or
Coca-Cola Agreement, or (iii) results in the creation or imposition of
(or the obligation to create or impose) any Lien upon any of the
properties or assets of Cineplex, Plitt or any Guarantor pursuant to the
terms of the Senior Subordinated Indenture or Coca-Cola Agreement.
(h) Subordination of Subordinated Debt: The Borrowings, including
Borrowings under the Supplemental Credits, and all other amounts owing
to the Agent and the Banks under the Credit Agreement and the Security
Documents, including in respect of the Supplemental Credits, and all
renewals, deferrals, amendments, modifications, extensions, refundings
or refinancings of any of the foregoing constitute "Senior Indebtedness"
as provided for and defined in the Senior Subordinated Indenture.
In addition to and not in limitation of the foregoing
(i) the Credit Agreement (as amended by this Agreement) and
the letter loan agreement set out in Schedule "N" attached to the Credit
Agreement together constitute the credit agreement representing the "New
Bank Credit Facilities" referred to in the Senior Subordinated Indenture
and the Agent and Banks are entitled to all of the benefits of being
"holders of Senior Indebtedness" under the "New Bank Credit Facilities"
pursuant to the terms of the Senior Subordinated Indenture; and
(ii) the Agent and the Banks in respect of Borrowings,
including Borrowings under the Supplemental Credits, shall be entitled
to all of the rights of a holder of "Senior Indebtedness" as such term
is defined in the Senior Subordinated Indenture pursuant to the terms of
the Senior Subordinated Indenture.
The representations and warranties made in this Agreement shall
survive the execution of this Agreement and all other agreements
provided for or contemplated hereby and each of the representations and
warranties shall be deemed to be repeated as of each Borrowing
(including, without limitation, each conversion and continuation of an
Advance) unless otherwise specified in such representation and warranty,
and the Banks shall be deemed to have relied upon such representations
and warranties at each such time.
In addition to the foregoing representations and warranties, each
of Cineplex and Plitt represent and warrant that Manbeck Theatre
Corporation has no property or assets and is in the process of being
dissolved. Upon its dissolution, Cineplex and Plitt will cause to be
delivered to the Agent evidence of its dissolution.
Section 11 - Indebtedness relating to Cavendish Theatre.
Reference is made to the Second Amendment Agreement made as of 31
March 1995 between the parties hereto and certain other persons, which
permitted Cineplex to incur the Cavendish Debt (as defined in the Second
Amendment Agreement) up to Cdn. $900,000. Section 4 of the Second
Amendment Agreement is amended by deleting the reference therein to Cdn.
$900,000 and replacing it with reference to Cdn. $975,126. The Banks
further agree that the security granted to the Landlord (as defined in
the Second Amendment Agreement) to secure the payment of the Cavendish
Debt, to the extent only that such security relates to the furniture,
fixtures and equipment located in the Cavendish Theatre, shall be
Permitted Liens within Section 1.01(www)(ix) of the Credit Agreement.
Section 12 - Confirmation and Acknowledgment
Cineplex, Plitt, each of the Guarantors and each of the Nominees
hereby acknowledges and consents to the entering into of this Agreement
and the matters dealt with herein and the transactions contemplated
hereby and acknowledges and agrees that the Guarantee and Security
Documents and all other agreements and documents including undertakings
and indemnities to which it is a party are in full force and effect as
at the date hereof and shall continue in full force and effect in
accordance with their respective terms and secure the payment and/or
performance by Cineplex, Plitt or such Guarantor, as applicable, of its
obligations under or in connection with the Credit Agreement, the
Guarantee or the Security Documents, as the case may be, as supplemented
and amended by this Agreement.
Section 13 - Direction to Agent
Each of the Banks hereby authorizes and directs the Agent to
execute on its behalf all of the documents and instruments contemplated
by this Agreement and all documentation that may be necessary or
incidental thereto to give effect to this Agreement.
Section 14 - Continuing Effect of Agreements
Except as amended by this Agreement, the Credit Agreement, the
Operating Credit Agreement and the Inter-Lender Agreement shall remain
in full force and effect, without amendment, and each is hereby ratified
and confirmed.
Section 15 - Counterparts
This Agreement may be executed in any number of counterparts and
all such counterparts taken together shall be deemed to constitute one
and the same instrument and shall be effective on the date when each of
the parties hereto has signed a copy hereof and shall have delivered the
same to the Agent.
Section 16 - Expenses
Reasonable costs and expenses incurred by the Agent and the Banks
in connection with this Agreement and the transactions contemplated
hereby (including reasonable fees and expenses of counsel for the Agent
and the Banks), whether or not Advances are made under the Supplemental
Credits, shall be for the account of Cineplex and Plitt.
Section 17 - Further Assurances
Cineplex, Plitt, each of the Guarantors and each of the Nominees
shall, at the request of the Agent, do all such further acts and execute
and deliver all such further documents as may, in the reasonable opinion
of the Agent, be necessary or desirable in order to fully perform and
carry out the purpose and intent of this Agreement.
Section 18 - Governing Law
This Agreement shall be governed by and construed in accordance
with the laws of the Province of Ontario and the federal laws of Canada
applicable in Ontario.
EXECUTED AND EFFECTIVE as of the date first written above.
THE BANKS
THE BANK OF NOVA SCOTIA
By: Ken Lehner
Name: Ken Lehner
Title:
NATIONAL BANK OF CANADA
By: Karen Koury and Anne Brown
Name: Karen Koury and Anne Brown
Title: Manager and Manager
THE BANK OF NEW YORK
By: Geoffrey C. Brooks
Name: Geoffrey C. Brooks
Title: Vice President
ROYAL BANK OF CANADA
By: S. Lokoff
Name: S. Lokoff
Title: Sr. Mgr.
THE BANK OF NOVA SCOTIA, as Agent
By: R.J. Boomhour
Name: R.J. Boomhour
Title:
THE BANK OF NOVA SCOTIA, as Operating Lender
By: R.J. Boomhour
Name: R.J. Boomhour
Title:
THE BANK OF NOVA SCOTIA, as Collateral Agent
By: Rob King
Name: Rob King
Title:
THE BANK OF NOVA SCOTIA, as Swap Lender
By: Rob King
Name: Rob King
Title:
NATIONAL BANK OF CANADA, as Swap Lender
By: Karen Koury and Anne Brown
Name: Karen Koury and Anne Brown
Title: Manager and Manager
THE BORROWERS
CINEPLEX ODEON CORPORATION
By: Ellis Jacob
Name: Ellis Jacob
Title: Executive Vice President and Chief Financial Officer
PLITT THEATRES, INC.
By: Ellis Jacob
Name: Ellis Jacob
Title: Executive Vice President and Chief Financial Officer
EACH OF THE UNDERSIGNED hereby acknowledges and agrees to and accepts
the terms and conditions set forth in this Agreement as of the date
first written above.
THE GUARANTORS
CINEPLEX ODEON CORPORATION
By: Ellis Jacob
Name: Ellis Jacob
Title: Executive Vice President and Chief Financial Officer
PLITT THEATRES, INC.
By: Ellis Jacob
Name: Ellis Jacob
Title: Executive Vice President and Chief Financial Officer
RKO CENTURY WARNER THEATRES, INC.
By: Ellis Jacob
Name: Ellis Jacob
Title: Executive Vice President and Chief Financial Officer
THE WALTER READE ORGANIZATION, INC.
By: Ellis Jacob
Name: Ellis Jacob
Title: Executive Vice President and Chief Financial Officer
PLITT SOUTHERN THEATRES, INC.
By: Ellis Jacob
Name: Ellis Jacob
Title: Executive Vice President and Chief Financial Officer
MANBECK THEATRE CORPORATION
By: Ellis Jacob
Name: Ellis Jacob
Title: Executive Vice President and Chief Financial Officer
CINEPLEX ODEON (QUEBEC) INC.
By: Ellis Jacob
Name: Ellis Jacob
Title: Executive Vice President and Chief Financial Officer
THE NOMINEES
796278 ONTARIO LIMITED
By: Ellis Jacob
Name: Ellis Jacob
Title: Executive Vice President and Chief Financial Officer
796279 ONTARIO LIMITED
By: Ellis Jacob
Name: Ellis Jacob
Title: Executive Vice President and Chief Financial Officer
619918 ONTARIO INC.
By: Ellis Jacob
Name: Ellis Jacob
Title: Executive Vice President and Chief Financial Officer
EXHIBIT 11.1
CINEPLEX ODEON CORPORATION
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(Calculated in accordance with Canadian generally accepted
accounting principles)
(In U.S. dollars, except number of shares)
<TABLE>
<CAPTION>
3 months ended 3 months ended 9 months ended 9 months ended
Sept. 30, 1997 Sept. 30, 1996 Sept. 30, 1997 Sept. 30, 1996
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Basic
- ------
Net loss (B) ($7,164,000) ($2,970,000) ($19,636,000) ($21,197,000)
============ ============ ============= ==============
Weighted average outstanding
common and subordinate
restricted voting shares (C) 176,799,000 176,765,000 176,793,000 159,007,000
============ =========== ============ ===============
Net loss per share (B/C) ($0.04) ($0.02) ($0.11) ($0.13)
============ =========== ============ ===============
Fully Diluted
- -------------
Net loss ($7,164,000) ($2,970,000) ($19,636,000) ($21,197,000)
Imputed interest on
stock options converted
at beginning of year
(net of income tax of nil) 0 (1) 0 (1) 0 (1) 0 (1)
------------- ------------ ------------- -------------
Adjusted net loss (E) ($7,164,000) ($2,970,000) ($19,636,000) ($21,197,000)
============= ============ ============== ==============
Weighted average
outstanding shares
- - after all conversions (F) 176,799,000 (2) 176,765,000 (2) 176,793,000 (2) 159,007,000 (2)
============ ============= ============ ==============
Net loss per share (E/F) ($0.04) ($0.02) ($0.11) ($0.13)
============ ============= ============ ==============
</TABLE>
(1) Imputed interest calculations would be anti-dilutive and therefore have
been excluded in calculations.
(2) Inclusion of conversions would be anti-dilutive and therefore are
excluded in calculations. Weighted average outstanding shares after all
conversions would be 191,254,000 for the 3 months ended September 30, 1997,
183,362,000 for the 3 months ending September 30, 1996, 191,265,000 for
the 9 months ending Septmber 30, 1997 and 166,082,000 for the 9 months
ending September 30, 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 3086
<SECURITIES> 403
<RECEIVABLES> 4369
<ALLOWANCES> 693
<INVENTORY> 8937
<CURRENT-ASSETS> 28323
<PP&E> 884274
<DEPRECIATION> 307700
<TOTAL-ASSETS> 647574
<CURRENT-LIABILITIES> 83606
<BONDS> 244788
0
0
<COMMON> 555399
<OTHER-SE> (357746)
<TOTAL-LIABILITY-AND-EQUITY> 647574
<SALES> 110680
<TOTAL-REVENUES> 427721
<CGS> 21513
<TOTAL-COSTS> 367661
<OTHER-EXPENSES> 53703
<LOSS-PROVISION> 320
<INTEREST-EXPENSE> 25159
<INCOME-PRETAX> (18802)
<INCOME-TAX> 834
<INCOME-CONTINUING> (19636)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19636)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
