Cinemark USA, Inc. Announces Commencement of Cash Tender Offer for Any and All of Cinemark USA, Inc.’s 5.875% Senior Notes due 2026

Rhea-AI Summary

Cinemark USA, a subsidiary of Cinemark Holdings (NYSE: CNK), has initiated a cash tender offer to buy back its outstanding 5.875% senior notes due 2026. As of July 9, 2024, $405 million worth of these notes were still outstanding. The offer, detailed in the Offer to Purchase document dated July 9, 2024, will expire on July 15, 2024, at 5:00 p.m. New York City time, unless extended or terminated earlier. Those who tender their notes by the Expiration Date will be eligible for a cash consideration per $1,000 principal amount of notes, determined based on a fixed spread of 50 basis points over the yield of the 1.750% U.S. Treasury due March 15, 2025.

The settlement date is expected to be July 18, 2024. The offer's completion is subject to certain conditions, including securing additional debt financing to fund the purchase of all outstanding notes and associated fees. The tender offer can be withdrawn or amended as per applicable law but is not contingent on a minimum amount of notes being tendered.

Positive

• Initiation of a tender offer for 5.875% senior notes due 2026, potentially enhancing financial flexibility.
• Expected settlement date of July 18, 2024, provides a clear timeline for investors.

Negative

• The offer is contingent on the completion of new debt financing, introducing financial risk.
• $405 million in outstanding notes could lead to significant cash outflow.

Insights

Financial Analyst

The tender offer by Cinemark USA to purchase its 5.875% senior notes due 2026 can indicate several strategic financial moves. Firstly, the company might be looking to refinance its debt at more favorable terms, probably due to current market conditions offering lower interest rates compared to when the original notes were issued. This can positively impact their future cash flows as lower interest obligations can improve net earnings and provide more cash for other operational needs.

Secondly, one must consider the motivation behind the tender offer. By reducing outstanding debt, Cinemark USA may be positioning itself to improve its financial health and balance sheet. Such moves are often seen positively by rating agencies and can lead to a better credit rating, which further reduces borrowing costs.

However, it's important to note the risk tied to the offer's condition of completing new debt financing. This introduces uncertainty as the success of the tender offer hinges on securing sufficient new financing, which might not be guaranteed.

Lastly, the specifics of the financial terms used in this transaction, such as the fixed spread of 50 basis points over the 1.750% U.S. Treasury due March 2025, need to be closely analyzed for their implications on the company’s cost of capital.

Legal Expert

From a legal perspective, the tender offer for Cinemark USA's senior notes involves adherence to various regulatory and procedural requirements. The offer needs to comply with securities laws, particularly regarding disclosures, timing and conditions associated with the tender. The mentioned conditions, such as the successful completion of debt financing transactions, are typical, but they must be clearly communicated to avoid any potential legal challenges or disputes from noteholders.

Another legal aspect to consider is the potential impact on existing covenants in Cinemark USA's other debt agreements. If such covenants exist, the company needs to ensure that this tender offer and the associated new financing do not breach any terms, which could lead to negative legal or financial consequences.

Lastly, the structure and terms of the new debt that Cinemark plans to incur will be crucial. The company must ensure that these terms are favorable and do not introduce excessive risk, particularly in a potentially volatile market environment.

PLANO, Texas--(BUSINESS WIRE)-- Cinemark Holdings, Inc. (NYSE:CNK) (the “Company” or “Cinemark”) announced today that its wholly-owned subsidiary, Cinemark USA, Inc. (“Cinemark USA”), has commenced a cash tender offer to purchase any and all of Cinemark USA’s 5.875% senior notes due 2026 (the “notes”). As of July 9, 2024, Cinemark USA had $405,000,000 aggregate principal amount of notes outstanding.

The tender offer is being made pursuant to an offer to purchase, dated as of July 9, 2024 (the “Offer to Purchase”), and a notice of guaranteed delivery. The tender offer will expire at 5:00 p.m., New York City time, on July 15, 2024, unless extended or earlier terminated as described in the offer to purchase (such time and date, as they may be extended, the “Expiration Date”).

Certain information regarding the notes and the U.S. Treasury Reference Security, the Bloomberg reference page and the fixed spread is set forth in the table below.

Title of Security	CUSIP Numbers	Aggregate Principal Amount Outstanding	U.S. Treasury Reference Security	Bloomberg Reference Page	Fixed Spread
5.875% Senior Notes due 2026	144A: 172441 BD8 Reg S: U17176 AK1	$405,000,000	1.750% U.S. Treasury due March 15, 2025	FIT3	50 bps

Holders of the notes who validly tender, and do not validly withdraw, their notes at or prior to the Expiration Date, or who deliver to the tender agent and information agent a properly completed and duly executed notice of guaranteed delivery in accordance with the instructions described in the offer to purchase, will be eligible to receive (1) consideration for each $1,000 principal amount of notes validly tendered and accepted for purchase, as determined in the manner described in the Offer to Purchase by reference to the fixed spread for the notes specified above plus the yield based on the bid-side price of the U.S. Treasury Reference Security specified above, as quoted on the applicable Bloomberg Reference Page specified above, at 10:00 a.m., New York City time, on July 15, 2024, but in no event less than $1,000 and (2) a cash amount equal to accrued and unpaid interest up to, but not including, the settlement date, which is expected to occur on July 18, 2024. Tendered notes may be withdrawn at any time at or prior to the Expiration Date. Cinemark USA reserves the right to terminate, withdraw or amend the tender offer at any time, subject to applicable law.

The tender offer is subject to the satisfaction or waiver of certain conditions, including Cinemark USA’s completion of one more or more debt financing transactions in an amount that is sufficient to fund the purchase of all of the outstanding notes and to pay all fees and expenses associated with such financing and the tender offer. The tender offer is not conditioned on any minimum amount of notes being tendered.

The tender offer is being made pursuant to the terms and conditions contained in the offer to purchase and notice of guaranteed delivery, copies of which may be obtained from D.F. King & Co., Inc., the information agent for the offer, by telephone at (800) 347-4826 (toll-free) or for banks and brokers, at (212) 269-5550 (Banks and Brokers only), by e-mail at cinemark@dfking.com or at the following web address: www.dfking.com/cinemark.

Persons with questions regarding the tender offer should contact the dealer manager: Wells Fargo Securities, LLC, Collect: (704) 410-4235, Toll-Free by telephone at (866) 309-6316.

None of the Company, Cinemark USA, the dealer manager, the tender offer agent, the information agent or the trustee for the notes, or any of their respective affiliates, is making any recommendation as to whether holders should tender any notes in response to the tender offer. Holders must make their own decision as to whether to tender any of their notes and, if so, the principal amount of notes to tender.

This press release is not an offer to purchase or a solicitation of an offer to sell any securities, and does not constitute a redemption notice for any securities. The tender offer is being made solely by means of the offer to purchase.

About Cinemark:

Headquartered in Plano, TX, Cinemark (NYSE: CNK) is one of the largest and most influential movie theatre companies in the world. Cinemark’s circuit, comprised of various brands that also include Century, Tinseltown and Rave, as of March 31, 2024 operated 502 theatres with 5,708 screens in 42 states domestically and 13 countries throughout South and Central America. Cinemark consistently provides an extraordinary guest experience from the initial ticket purchase to the closing credits, including Movie Club, the first U.S. exhibitor-launched subscription program; the highest Luxury Lounger recliner seat penetration among the major players; XD - the No. 1 exhibitor-brand premium large format; and expansive food and beverage options to further enhance the moviegoing experience.

Forward-looking Statements

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on information currently available as well as management’s assumptions and beliefs today. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from the results expressed or implied by the statements, and investors should not place undue reliance on them. Risks and uncertainties that could cause actual results to differ materially from such statements include:

• future revenue, expenses and profitability;
• currency exchange rate and inflationary impacts;
• the future development and expected growth of our business;
• projected capital expenditures;
• access to capital resources;
• attendance at movies generally or in any of the markets in which we operate;
• the number and diversity of popular movies released, the length of exclusive theatrical release windows, and our ability to successfully license and exhibit popular films;
• national and international growth in our industry;
• competition from other exhibitors, alternative forms of entertainment and content delivery via streaming and other formats;
• determinations in lawsuits in which we are a party; and
• the ongoing recovery of our business and the motion picture exhibition industry from the effects of the COVID-19 pandemic and the 2023 writers' and actors' guilds strikes.

You can identify forward-looking statements by the use of words such as “may,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “anticipates,” “believes,” “plans,” “expects,” “future” and “intends” and similar expressions which are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict. Such risks and uncertainties could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. In evaluating forward-looking statements, you should carefully consider the risks and uncertainties described in the “Risk Factors” section or other sections in the Company's Annual Report on Form 10-K filed February 16, 2024. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements and risk factors. Forward-looking statements contained in this press release reflect our view only as of the date of this press release. We undertake no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240708860378/en/

Investor Relations Contact:

Chanda Brashears

(972) 665-1671

cbrashears@cinemark.com



Media Contact:

Julia McCartha

(972) 665-1322

pr@cinemark.com

Source: Cinemark Holdings, Inc.

FAQ

What is the tender offer announced by Cinemark USA?

Cinemark USA has initiated a cash tender offer to purchase any and all of its 5.875% senior notes due 2026.

When did Cinemark USA announce the tender offer for its 5.875% senior notes?

The announcement was made on July 9, 2024.

What is the aggregate principal amount of notes outstanding for Cinemark USA’s 5.875% senior notes?

As of July 9, 2024, the aggregate principal amount was $405 million.

When is the expiration date for Cinemark USA’s tender offer?

The tender offer will expire at 5:00 p.m. New York City time, on July 15, 2024, unless extended or earlier terminated.

How is the consideration for Cinemark USA’s tender offer calculated?

The consideration is based on a fixed spread of 50 basis points over the yield of the 1.750% U.S. Treasury due March 15, 2025.

What conditions must be met for Cinemark USA’s tender offer to be completed?

The offer is subject to the completion of debt financing transactions sufficient to fund the purchase of all outstanding notes and associated fees.

When is the settlement date for Cinemark USA’s tender offer?

The settlement date is expected to be July 18, 2024.