Cineworld Group PLC said Monday that Canada’s Cineplex Inc. has started legal proceedings against it in relation to its termination last month of a proposed acquisition of the Canadian company.
The proceedings allege that Cineworld breached its obligations under the agreement and claim damages of up to 2.18 billion Canadian dollars ($1.61 billion) minus the value of Cineplex shares retained by Cineplex shareholders, Cineworld said.
Cineworld, a U.K. cinema operator which also owns U.S. chain Regal, said it didn’t breach any obligations or duties and will vigorously defend this claim. Cineworld believes that Cineplex’s claim, if successful, would be limited to its costs and expenses in relation to the acquisition and wouldn’t be assessed by reference to the price of the deal.
Cineworld said it terminated the agreement because Cineplex breached a number of its covenants under the deal, and that it suffered damages and losses as a result. Cineworld intends to counter-claim against Cineplex for damages and losses, it said.
Cineplex last month denied these allegations and said Cineworld had no legal basis to terminate the deal.