STELLARTON, NS, June 27, 2013 /CNW/ - Empire Company Limited (the
"Company") (TSX: EMP.A) has announced that Empire Theatres has reached
a definitive agreement with Cineplex Inc. for the sale of 24 theatres
and 170 screens in Atlantic Canada and 2 theatres with 48 screens in
Ontario. Empire Theatres has also reached a separate definitive
agreement with Landmark Cinemas for the sale of 20 theatres and 179
screens in Ontario and Western Canada.
Paul D. Sobey, President and CEO of Empire Company Limited stated, "The
decision to sell the business of Empire Theatres was a very difficult
one as it has a long history with our Company and is a great business
with excellent employees who have worked hard over many years to build
an attractive entertainment destination.
"The decision, however, aligns with the strategic direction of the
Company to focus our resources on our food retail business through our
100 percent interest in Sobeys Inc. and on our related real estate
investment through our 42.8 percent ownership interest in Crombie
The purchase price for the Cineplex transaction is $200 million to be
paid in cash, subject to certain adjustments to be made at closing.
The purchase price for the Landmark transaction is approximately $55
million subject to certain adjustments to be made at closing, with the
purchase price to be paid as follows: $31 million in cash on closing;
$19 million in equity; and an earn out right which management estimates
has a potential value of approximately $5 million. Upon closing, the
assets will be held by a new entity with Empire Theatres' equity being
the controlling interest. The new entity will be consolidated into the
Company's financial statements, including $30 million of debt in the
new entity. Landmark will manage the business and have a right to buy
out Empire Theatres' equity interest for $19 million in cash until
December 31, 2013, following which Empire Company can agree to sell its
equity interest in the entity and require Landmark to sell on the same
Closing of the transactions is subject to satisfaction of customary
conditions and relevant regulatory approvals, which includes approval
from the Competition Bureau. Closing of each transaction is expected to
occur by late summer of 2013. Empire Theatres is not obligated to close
either transaction without closing the other.
On closing, the Company expects to receive cash of approximately $216
million after adjustments and expenses, and intends to utilize these
proceeds for debt repayment. The Company expects to record a net
pre-tax gain on the two transactions of approximately $75 million.
This news release contains forward-looking information about the sale of
Empire Theatres and use of expected proceeds. The forward-looking
statements in this news release are subject to a number of risks and
uncertainties that could cause actual events or results to differ
materially from current expectations, including those related to the
business generally, which are set out in materials filed with the
securities regulatory authorities in Canada from time to time,
including the risk section of the annual Management's Discussion and
Analysis report and Annual Information Form. No assurance can be given
that these transactions will be completed, or the timing of any
closing. Some of the factors that could affect the closing of the
transaction include the need to obtain regulatory approval and
satisfaction of other closing conditions. The value of the Company's
remaining equity interest and in the earn out and its ability to
realize on either may be impacted by market conditions and Landmark's
ability to successfully operate the assets.
The Company does not undertake to update any forward-looking statements
that may be made from time to time by or on behalf of the Company other
than as required by applicable securities laws.
Empire Company Limited (TSX: EMP.A) is a Canadian company headquartered
in Stellarton, Nova Scotia. Empire's key businesses include food
retailing and related real estate. With over $17 billion in annual
sales and approximately $7.0 billion in assets, Empire and its
subsidiaries directly employ approximately 47,000 people.
Additional financial information relating to Empire, including the
Company's Annual Information Form, can be found on the Company's
website at www.empireco.ca or at www.sedar.com.
ABOUT EMPIRE THEATRES
Empire Theatres Limited is a Canada-wide film exhibition company
providing an exciting out-of-home entertainment experience including
traditional film exhibition as well as other content using its digital
and satellite capabilities. Empire Theatres Limited is a 100 percent
owned subsidiary of Empire Company Limited that owns and operates 50
theatres across Canada with 421 screens, including 7 IMAX theatres and
5 Empire Extra locations. Empire Theatres Limited's corporate
headquarters are located in New Glasgow, NS, with regional offices in:
Halifax, NS; Toronto, ON; and Calgary, AB. With approximately 2,500
employees, Empire Theatres provides excellent employment opportunities
for the youth of Canada in an exciting and energetic industry.
SOURCE: EMPIRE COMPANY LIMITED
For further information:
Executive Vice President & Chief Financial Officer
Empire Company Limited
Vice President, Communications & Corporate Affairs