Cinemark USA, Inc. Announces Launch of $500 Million Senior Notes

Rhea-AI Summary

Cinemark Holdings, Inc. (NYSE:CNK) announced a private offering of $500 million senior notes due 2032 through its subsidiary, Cinemark USA. The senior notes will be guaranteed by certain subsidiaries of Cinemark USA and are senior unsecured obligations. Proceeds from the offering will fund a cash tender offer to purchase all of Cinemark USA's 5.875% senior notes due 2026, pay related fees and expenses, and cover general corporate purposes. The notes and guarantees will be offered to qualified institutional buyers and certain non-U.S. persons, exempt from registration under the Securities Act of 1933 and applicable securities laws.

Positive

• Launch of $500 million senior notes due 2032, providing new capital.
• Proceeds to fund the purchase of existing senior notes, reducing near-term debt obligations.
• Reallocation of financial resources to general corporate purposes.

Negative

• Increase in long-term debt obligations with the issuance of new notes.

Insights

Financial Analyst

Cinemark's decision to issue $500 million in senior notes is a significant development for investors to consider. The new notes, due in 2032, are intended to replace the existing 5.875% senior notes that are due in 2026. This move is largely driven by the desire to manage and potentially lower interest expenses over time. By refinancing existing debt, Cinemark aims to extend its debt maturity profile, which can help ease short-term liquidity pressures and provide financial flexibility.

However, the success of this strategy hinges on the terms of the new notes. If the interest rate on the new offering is lower than 5.875%, Cinemark stands to reduce its interest burden. Conversely, if the rate is higher, the company might face increased interest costs in the long run, which could negatively impact profitability.

Investors should closely monitor the final terms of the new notes to assess the overall financial impact. It's also essential to consider the company's ability to generate consistent cash flows to cover its debt obligations, given the current economic environment and the recovery pace of the cinema industry post-pandemic.

In conclusion, while the move to issue new senior notes demonstrates proactive financial management, investors should remain cautious and await further details on the terms and economic conditions affecting Cinemark's operations.

Market Research Analyst

The cinema industry has faced significant challenges in recent years, particularly due to the COVID-19 pandemic, which has impacted foot traffic and revenue. Cinemark's decision to launch senior notes reflects a broader industry trend where companies seek to stabilize their financial standing and prepare for a gradual return to normalcy.

From a market perspective, issuing $500 million in senior notes allows Cinemark to restructure its debt, potentially obtaining better interest rates and extending debt maturities. This can make Cinemark more resilient to short-term volatility and economic downturns.

Nevertheless, the success of this strategy depends on various external factors, including consumer behavior and box office performance as theaters reopen. If the cinema industry experiences a robust recovery, Cinemark could see improved revenue streams, making the debt issuance a shrewd strategic move. Conversely, a slower recovery could strain the company's finances further.

Retail investors should be aware that while this move provides liquidity and financial flexibility, it also increases the company's leverage. It's important to stay informed about industry trends and Cinemark's performance metrics to make well-informed investment decisions.

PLANO, Texas--(BUSINESS WIRE)-- Cinemark Holdings, Inc. (NYSE:CNK) (“Cinemark” or the “Company”) announced today that its wholly-owned subsidiary, Cinemark USA, Inc. (“Cinemark USA”), plans to commence a private offering (the “Offering”) that is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), to eligible purchasers of $500 million aggregate principal amount of senior notes due 2032 (the “Notes”).

The Notes will be guaranteed by certain of Cinemark USA’s subsidiaries that guarantee, assume or in any other manner become liable with respect to any of Cinemark USA’s or any guarantor’s other debt. The Notes and the guarantees will be Cinemark USA’s and the guarantors’ senior unsecured obligations and will rank equally in right of payment with Cinemark USA’s and the guarantors’ existing and future senior debt. Cinemark USA intends to use the net proceeds of the proposed Offering (i) to fund a cash tender offer to purchase any and all of Cinemark USA’s 5.875% senior notes due 2026 (the “Tender Offer”), (ii) to pay fees and expenses related to the Offering and the Tender Offer and (iii) any remainder for general corporate purposes. 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 an offer to purchase.

The Notes and the related guarantees will be offered and sold only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and to certain non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act. The Notes and the related guarantees have not been and will not be registered under the Securities Act or the securities laws of any state or other jurisdiction, and the Notes may not be offered or sold in the United States without registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities or blue sky laws and foreign securities laws.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy any securities, nor shall there be any sales of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This notice is being issued pursuant to and in accordance with Rule 135c under the Securities Act.

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/20240708225768/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

FAQ

What is Cinemark's recent financial announcement in 2023?

Cinemark announced a private offering of $500 million senior notes due 2032.

How will Cinemark use the proceeds from the $500 million senior notes offering?

The proceeds will fund the purchase of Cinemark USA's 5.875% senior notes due 2026, pay related fees and expenses, and cover general corporate purposes.

What is the purpose of Cinemark's tender offer in their latest announcement?

The tender offer aims to purchase all of Cinemark USA's 5.875% senior notes due 2026.

What are the terms of the new $500 million senior notes offered by Cinemark?

The new senior notes are due 2032 and are senior unsecured obligations guaranteed by certain subsidiaries.

How are Cinemark’s new senior notes being offered?

The notes are offered privately to qualified institutional buyers and certain non-U.S. persons, exempt from registration under the Securities Act.