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Cineworld shares tumble after damages over scrapped Cineplex deal

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Cineworld shares plunged by 40% on Wednesday after the British cinema operator was ordered to pay C$1.23 billion ($957 million) in damages to rival Cineplex for abandoning a planned takeover, a decision it said it would appeal.

Cineworld, the world’s second largest cinema operator, said it disagrees with the Ontario Superior Court’s judgement and does not expect damages to be payable to the Canadian company while any appeal is pending.

The Canadian court ruling denied Cineworld’s counter-claim and included C$5.5 million for lost transaction costs.

Cineworld might win the appeal, negotiate a resolution with Cineplex, or be obliged to raise more capital on unfavourable terms, Peel Hunt analyst Ivor Jones wrote in a note.

“We believe the damages are in excess of Cineworld’s available resources,” Jones wrote.

Shares of Cineworld fell as much as 40% on the London Stock Exchange to hit one-year lows before recouping some losses to trade down 25% at 33.8 pence at 0858 GMT.

Cineworld has been struggling with debt of about $8.3 billion and has mooted listing itself or a part of its business in the United States, where it generates the bulk of its revenue from its Regal Cinemas.

Cinema operators have been battered by the pandemic, with lockdowns shutting cinemas for much of the year and delaying movie releases at a time when the industry has been trying to stave off increased competition from streaming services.

Cineplex on Tuesday said its board was pleased with the judgement and would have no further comment in the 30-day period during which either party can appeal the decision.

Cineworld’s takeover of Cineplex, announced in December 2019, would have seen it become North America’s biggest cinema operator, but the British firm walked away from the $1.65 billion deal in mid-2020 citing breaches in the merger agreement by Cineplex.

Cineplex rejected those claims and accused the British company of avoiding its obligations under the agreement in light of the pandemic’s impact on the industry.

($1 = 1.2857 Canadian dollars)

 

(Reporting by Chris Peters and Yadarisa Shabong in Bengaluru; editing by Subhranshu Sahu and Jason Neely)

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Workers at Teck Resources’ British Columbia mine to hold ratification vote

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Canadian miner Teck Resources Ltd said on Monday that a union representing 1,048 workers at its British Columbia mine has agreed to hold a ratification vote on the mediators’ recommendation.

The union will schedule a ratification vote to be concluded no later than January 24, the company said.

Last week, the company said it had received a strike notice https://reut.rs/3A7TJZQ from the union at its Highland Valley Copper Operations in British Columbia, without providing any reasons behind the potential strike.

 

(Reporting by Rithika Krishna in Bengaluru; Editing by Chizu Nomiyama)

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Markets split on BoC decision as business survey, inflation loom – BNN

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The Bank of Canada is getting a pair of key indicators this week ahead of a rate decision next Wednesday that’s virtually a coin toss, as far as markets are concerned.

First up on Monday, the central bank releases its quarterly Business Outlook Survey, which provides a snapshot of how approximately 100 corporate leaders are feeling about the economy and their own business fundamentals.

When the last survey was released in October, it showed the broadest gauge of sentiment was at the highest level in the survey’s history. That was despite worsening labour shortages and as more than half of respondents (57 per cent) said they expected labour costs to accelerate over the next year.

“[Monday’s] Business Outlook Survey might have been completed too early to catch Omicron uncertainties, so expect respondents to retain a healthy dose of optimism,” said CIBC World Markets Chief Economist Avery Shenfeld in a report to clients Friday.

“The survey could show a majority expecting inflation to run above the top end of the Bank of Canada’s one-three per cent inflation band. If not for Omicron, that would spell a rate hike in January, but the uncertainties surrounding how long this disruption will last should be enough to defer that decision.”

Meanwhile, Statistics Canada will release the consumer price index for December on Wednesday. Economists are expecting to see inflation rose 4.8 per cent year-over-year in the month; that would be the fastest rate of growth since 1991.

As of 8:30 a.m. Monday morning, market data shows investors see a 59 per cent chance of a rate hike when the Bank of Canada delivers its decision on Jan. 26.

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House Price Index rose 26% in 2021, fastest pace on record – CBC News

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The Canadian Real Estate Association’s House Price Index rose by 26.6 per cent in the 12 months up to December, the fastest annual pace of gain on record.

The group, which represents more than 100,000 realtors and tabulates sales data from homes that listed and sell via the Multiple Listings Service, said the supply of homes for sale at the end of the month hit an all-time low.

After pausing for a few weeks in the early days of the pandemic, Canada’s housing market has been on an absolute tear for the past two years, as feverish demand from buyers wishing to take advantage of rock-bottom interest rates has drastically outpaced the supply of homes to buy.

That imbalance is a major factor contributing to higher prices, as buyers have to pay more and more to outbid others because of the lack of alternatives.

Various experts are suggesting that parts of the country are showing signs of being in a speculative bubble, and CREA says the biggest reason for runaway price increases is that there aren’t enough homes being put up for sale.

“There are currently fewer properties listed for sale in Canada than at any point on record,” CREA’s chief economist Shaun Cathcart said. “So unfortunately, the housing affordability problem facing the country is likely to get worse before it gets better.”

High prices not denting demand

CREA says the average price of a Canadian home that sold on MLS in December went for $713,500. That’s actually down from the record high of more than $720,000 in November, but still well up on an annual basis.


High prices don’t seem to be slowing demand, however, as 2021 was the busiest year for home sales ever. Some 666,995 residential properties traded hands on MLS last year, smashing the previous annual record by 20 per cent.

TD Bank economist Rishi Sondhi said that there was a less than two-month supply of homes for sale during the month, which means at the current sales pace, all listings would be gone in less than two months. Under normal conditions, there’s a five-month supply of homes for sale, and Sondhi says that supply and demand imbalance is a major factor in eye-popping price gains.

“With interest-rate pull-forward behaviour keeping demand so strong, and supply struggling to keep up, it’s little wonder why prices are continuing their relentless upward march,” he said. “Buyers pulling forward demand ahead of looming interest rate hikes kept sales at unsustainable levels last month. How long this effect will last is uncertain, but it should eventually fade.”

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