Cineplex Galaxy To Purchase Famous Players.

TORONTO -- Cineplex Galaxy LP (TSX:CGX.UN) announced today that it has agreed to purchase the Famous Players movie exhibition business from Viacom Inc. (NYSE: VIA and VIA.B). The transaction is valued at $500 million, inclusive of approximately $36 million in capital lease obligations. The transaction is expected to close during the third quarter, subject to customary closing conditions.

The transaction combines Canada's two leading theatre exhibition companies. Famous Players operates a total of 81 locations with 787 screens across the country, including theatres in its joint ventures with IMAX and its partnership with Alliance Atlantis. Famous Players' theatres include the Coliseum, Colossus, Paramount and SilverCity brands. Cineplex Galaxy operates or has an interest in 86 theatres with 775 screens across Canada in six provinces and operates theatres under the Cineplex Odeon and Galaxy brands.

"I am thrilled to make this announcement" said Ellis Jacob, President and CEO, Cineplex Galaxy LP. "Working in conjunction with Onex Corporation, our largest unit holder and controlling partner, we are bringing together two great companies and are creating an exceptional opportunity to build value through an improved cost structure and expanded product offerings."

"We recognized early on the benefit of this acquisition for Cineplex Galaxy and its unit holders and we were pleased to work closely with management in this extraordinary effort," commented Tim Duncanson, a Director of Cineplex Galaxy GP and a Managing Director of Onex Corporation.

Cineplex Galaxy also announced that it has entered into a consent agreement with the Commissioner of Competition permitting Cineplex Galaxy to complete the transaction. The consent agreement requires Cineplex Galaxy to divest 35 theatres consisting of 284 screens with annual box office revenues of close to $100 million (as reported by Entertainment Data Inc). The theatres to be divested are located in all six provinces and in all major cities where both Cineplex Galaxy and Famous Players currently operate.

"This is truly a unique opportunity that will enhance the value of our business significantly," said Jacob. "I believe our investors will be especially pleased with this announcement. Once integrated, we expect this acquisition will be meaningfully accretive to our distributable cash flow."

For 2004, Famous Players had total revenues of $520 million and Adjusted EBITDA of $51 million. Cineplex Galaxy had total revenues of $354 million and Adjusted EBITDA of $75 million in 2004. "The Cineplex Galaxy management team has excelled in integrating businesses in the past and expects to realize significant operating synergies and improved EBITDA from the combined companies as a result of this transaction" said Jacob. Theatre level cash flow for the theatres to be divested was approximately $13 million for the year ended 2004.

Cineplex Galaxy plans to finance the transaction through a combination of debt and equity. Scotia Bank, RBC Capital Markets and National Bank Financial have provided commitments to finance the entire purchase price.

About Cineplex Galaxy LP:

Cineplex Galaxy LP is a leading exhibitor of motion pictures in the entertainment industry. Headquartered in Toronto, Canada, Cineplex Galaxy LP currently operates 86 theatres with a total of 775 screens in six provinces across Canada. Cineplex Odeon Cinemas, Galaxy Cinemas and the associated brands are owned and operated by Cineplex Galaxy LP. There are 64 Cineplex Odeon Cinemas located in major urban centres and 22 Galaxy Cinemas featured in mid-size markets. Proudly Canadian, Cineplex Galaxy Income Fund, which owns approximately 42% of Cineplex Galaxy LP, is a public company traded on the Toronto Stock Exchange under Cineplex Galaxy Income Fund (symbol CGX.UN). More information can be found at www.cineplexgalaxy.com.

About Onex:

Onex Corporation is a diversified company with annual consolidated revenues of approximately $18 billion and consolidated assets of approximately $13 billion. Onex is one of Canada's largest companies with global operations in service, manufacturing and technology industries. Its operating companies include Celestica Inc., Magellan Health Services, Inc., Emergency Medical Services Corporation, Res-Care, Inc., Center for Diagnostic Imaging, Inc., ClientLogic Corporation, Cineplex Galaxy LP, Cosmetic Essence, Inc., J.L. French Automotive Castings, Inc., Commercial Vehicle Group, Inc., Performance Logistics Group, Inc. and Radian Communication Services Corporation. Onex shares trade on the Toronto Stock Exchange under the stock symbol OCX.SV.

Cineplex Galaxy LP (TSX:CGX.UN)