Proactive Investors - Cineplex (TSX:CGX) Inc announced on Wednesday that it has agreed to sell Player One Amusement Group (P1AG), its arcade game business, to OpenGate Capital for $155 million in cash.
The deal would also see P1AG continue to supply and service games in Cineplex’s theatres and location-based entertainment venues, including its Rec Room and Junxion venues, in a long-term agreement.
The transaction is expected to close in the first quarter of 2024 and is subject to regulatory approvals and other customary closing conditions.
"As we continue to focus on our growth plan, the strategy to divest P1AG came at an opportune time to strengthen our balance sheet," Cineplex CEO Ellis Jacob said in a statement.
In its latest quarterly financial results, Cineplex had long-term debt totaling $814.8 million as of September 30, including about $267 million in convertible debentures.
While COVID-19 restrictions drove up the company’s debt levels, recent film hits such as “Barbie” and Taylor Swift’s concert movie have boosted Cineplex’s fortunes.
Meanwhile, films such as “Aquaman and the Lost Kingdom,” “Napoleon,” “Wonka” and “Renaissance: A Film by Beyoncé” should help Cineplex achieve a strong finish to 2023.
P1AG was formed through a merger with six related companies and currently owns 37,000 pieces of equipment serving 3,800 locations.
Shares of Cineplex closed 2.3% lower at $8.78 on Wednesday.