Cinemark Lays Off 17,500 Workers, Furloughs 50% of Corporate Staff

The cinema chain recently announced a planned $250 million debt issue
Cinemark Holdings has laid off more than 17,500 hourly employees and furloughed 50% of its corporate employees at 20% of their salary, the theater chain revealed in a new filing with the Securities and Exchange Commission.
The movie theater chain has been grossly impacted by the continued novel coronavirus pandemic, forced to shut theater operations across the country. The company’s CEO, Mark Zoradi, whose pay rose to $6.3 million in 2019, is currently going without a salary as the company’s revenues have ceased.
On Monday, Cinemark also said it planned to issue $250 million worth of debt securities for general corporate purposes and to increase liquidity. 
“The recent outbreak of the COVID-19 pandemic has had an unprecedented impact on the world and our industry. The situation continues to be volatile and the social and economic effects are widespread,” the company said in a filing. “Although we believe the closure of our theaters is temporary, we cannot predict when the effects of the COVID-19 pandemic will subside or when our business will return to normal levels. 
“The longer and more severe the pandemic, including repeat or cyclical outbreaks beyond the one we are currently experiencing, the more severe the adverse effects will be on our business, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness,” the filing continued. “Even when the COVID-19 pandemic subsides, we cannot guarantee that we will recover as rapidly as other industries”
Cinemark, like other exhibitors and companies in Hollywood, has taken drastic measures to ensure the business will be able to survive and recover from the pandemic. The CFO has undertaken a formal daily review and approval process for all outgoing procurement and payment requests, and discussing with landlords and major suppliers whether certain contractual payments can be delayed.
Cinemark is relying on relief from the $2 trillion CARES Act. Based on a review of its potential, the company said it expects to receive an approximately $20 million cash tax refund in 2020 related to qualified improvement property expenditures from 2018 and 2019. 
“Although we are reviewing, and intend to seek, any available potential benefits under the CARES Act, including those described above, we cannot predict the manner in which such benefits will be allocated or administered and we cannot assure you that we will be able to access such benefits in a timely manner or at all,” the filing reads. “We believe that the exhibition industry has historically fared well during recessions, and we remain optimistic that it will rebound and benefit from pent-up social demand as home sheltering subsides and people seek togetherness with a return to normalcy. 
“However, we cannot assure you that the impact of COVID-19 will not continue to have an adverse effect on our business, results of operations, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness, some of which may be significant,” it continues.
While Cinemark is certainly struggling through the pandemic, it has fared better than some of its peers. 
B. Riley FBR analyst Eric Wold upgraded Cinemark’s stock last week to “buy” from “neutral,” amid growing confidence that the theatrical box office will be able to get back its footing following the novel coronavirus pandemic.

“We came away from our recent hosted group investor call increasingly confident in management’s ability to control cash flow and get through this shutdown period without any adverse liquidity events-and be in a position of strength on the other side,” Wold wrote in a note to clients. “We view this as an attractive additional entry point for investors who remain positive on the exhibition industry in general and want to be positioned for when visibility into a theater reopening timeline becomes clearer.”
Cinemark Lays Off 17,500 Workers, Furloughs 50% of Corporate Staff Cinemark Lays Off 17,500 Workers, Furloughs 50% of Corporate Staff Reviewed by STATION GOSSIP on 08:21 Rating: 5

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