Cineplex has approached bankrupt rival Cineworld’s lenders for a potential merger with the British company’s U.S. unit Regal Entertainment, according to a Wall Street Journal report on Wednesday.
Cineworld and Cineplex are under a legal battle since the London-based Cineworld rescinded its offer to buy the Canadian cinema chain Cineplex in 2020.
The planned takeover was abandoned with Cineworld citing breaches in the merger agreement, prompting a $890 million damages claim.
Affected by massive debt, Cineworld this month filed for bankruptcy in the U.S.
Cineworld had previous loans to fund part of its $3.6 billion purchase of Regal in 2017 to create the world’s second-largest movie theatre chain.
According to the report citing people familiar with the matter, Cineplex is in early talks with Cineworld’s lenders about taking over Regal, in exchange for debt and stock backed by the combined business.
Cineworld and Cineplex held talks this year about merging operations but failed to reach an agreement.
According to Reuters Cineworld’s net debt, including lease liabilities of about $4 billion, stood at $8.9 billion at the end of 2021.
The company’s market value at Tuesday’s market close was about 37 million pounds ($39.5 million).