Cinemark, the United States' third largest theater chain, is selling off $250 million worth of debt securities in order to raise cash for "general corporate purposes including further increasing its liquidity" as the coronavirus pandemic -- and resulting theater closures -- continues. The theater chain announced on Monday the sale of senior secured notes on Monday. According to the SEC filing, the debt will be secured by a first-priority lean on its leases. The sale comes on the heels of a recent announcement that Cinemark CEO Mark Zoradi and the company's board of directors will forgo their salaries during the continued shutdown.
In a letter to shareholders (via Deadline) Zoradi noted the challenges the pandemic has presented for the chain.
""Everyone continues to battle through this uncertainty, including Cinemark," the statement reads. "We are taking prudent steps to withstand the economic impact of our temporary closures during this pandemic. Our priority as we navigate this uncharted territory is to ensure that Cinemark will be able to open its theaters and employ our global team members when this pandemic Subsides."
The debt securities sale also comes after Fitch Ratings downgraded Cinemark's credit rating on April 9 citing concerns that theater closures will last until at least June. Moody's Investors Services followed suit on Monday, downgrading the company's credit with a negative outlook, citing "the cinema industry's current operational challenges" as a reason.
Cinemark closed all of their United States locations in mid-March in an effort to help stop the spread of COVID-19.
"Through these absolutely unprecedented and evolving times, one thing will not change, and that is Cinemark's dedication to its team members and moviegoers," Zoradi said in a statement at that time. "The decision to close our U.S. theatres was incredibly tough, but we know it is the right thing to do as global Coronavirus concerns continue to escalate. We will closely monitor recommendations of national and local governmental health organizations and look forward to inviting everyone to once again enjoy experiencing the movies with Cinemark."
Cinemark is just the latest theater chain to deal with major challenges as a result of the coronavirus pandemic. Standard & Poors downgraded AMC Theatres' credit rating earlier this month, saying that they did not believe that the chain would be able to bounce back from the damage the pandemic-related closures have caused the chain. On Saturday, reports surfaced suggesting that AMC was in talks to hire Weil, Gotshal & Manges to direct the company through a Chapter 11 bankruptcy filing, a move that would allow the chain to remain open for business while restructuring debt.