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@Tegop, SP was £3 in 2019 and £1 in 2021 but it would be grave (for wealth/capital) mistake to use historic performance as reference.
Back then it was a different business with profits and accumulated capital, losses/writedowns have erased it into sub-zero territory, new operating environment insures further losses for years and equity is already negative, technically (balance sheet test) it's already insolvent.
If it goes into admin then secured creditors are at risk of getting in loss as fire-sale asset value is very likely insufficient to cover asset-backed liabilities (half of goodwill and intangibles will be revalued for 60+% less, property/plant/equipment category will go down for 50%). Unsecured creditors will get either nothing or single-digit pennies in pound (more than 90% loss) obviously leaving nothing to shareholders.
Debt maturity profile (and 10%+ interest charge on some categories of it, up to slightly above 15% like with B1 term loan maturing in 2024) under these circumstances is another red flag waiving (pages 140-142 of 2021 annual report).
Refinancing (as it matures in 2023/2024/.. and so on) or capitalizing interest payments under current increasing market rates conditions doesn't look like makes things better.
OPEX (incl. interest on debt) is sitting above £1.5B per annum and there's hardly much left to negate it on gross profit or gross margin side (revenues net direct costs).
This $1B Cineplex court ruling would be (or already is even if enforced partially, e.g. via lower settlement with them) pretty much game over for CINE. all IMO.
OK Andy111 for now let's assume you are a UK lawyer and not a troll from the Plex forum...
Where are you on Judge Barbara's calculation for damages being based on "lost" synergies. Synergies are only realised when companies are merged and this didn't happen
BlueBuxton, I am a UK M and A (mergers and acquisitions) partner in a major international law firm. I have done this type of work for 30 years.
If anyone thought this is a 80p stock and does not think this is a bargain at 23p, he should have sold ages ago.
Everyone else can average down until the dust settles.
It is pretty simple, you will only see a re-rating as soon as the cineplex case is cleared out. Court hearing 12/13 oct, court resolution in 1q23.
For the RCF, end of june, let’s hope for a waiver or refinancing. Paying back will be a tough one, but we won’t certainly see a breach. They are doing everything they can to solve this.
Monthly results only started to improve as of March. March was positive cash flow, april slightly positive, and may/june/july will do much better.
At interim results we will see an adjustment to the base case scenario, they will lower the assumptions. So far, everything is under control. It is not opportune to refinance existing debt.
In case of shortage in liquidity, cine still has some options to monetize. In the end, they target a reversal od the court hearing, a significant re-rating of the shares followed by an equity raise to lower leverage.
It might be an out of court settlement, but i think any outcome will keep the share price low for quite some time.
Anyone who bought at 80p+ are goi g to be here for a few years waiting for a profit... and I cant see any kind of dividend for a long time either.
I'm not de-ramping thus share... I'm invested. I'm just being realistic with my choices.
Funds are locked away in an account that will mature one day... but not for a while.
The real question I think is for Plex. How they are going to see their money if they are asking for $1bn and Cine value is at $315m with $8bn debt? I am betting for an out of court resolution.
@Andy
This is very well trodden ground on this bb
The appeal statement provides clear rebuttals to the points you have made. Particularly around risk allocation of the pandemic that the Mae clause allocates risk to Cine as a condition of closing ie they couldn’t back out of closing the deal simply because a pandemic hit NOT that the business could be managed outside of the parameters of the whole agreement because a pandemic hit - that’s a difference in argument that both sets of lawyers have been arguing
Most sensible people on this board agree the breach can be argued both ways. Personally Im not that interested in one lawyers option or judge but I would love to have a straw poll of say 100 or 1000 lawyers or judges to get a better sense of how likely the majority would be to side with which argument you as there is never going to be one correct or incorrect interpretation.
Synergies is a whole other discussion…
If there is even a whiff of this case going the Cineplex way, I can see the share price rising just before to allow bug holders to get out, and then it crash on the news. Seems that's how most balls are rolled in the markets.
They agreed to buy plex on the basis that plex will not exceed 750million in debt. CINEPLEX stopped paying landlords to the tune of 200MIllion to keep the deal. That is the ordinary course argument. You are saying "outbreak of illness" frees cineplex from committing to the terms of the deal to begin with?
Also. What do you think of the synergy damages? Why would plex benefit from synergies when the relinquished their shares to the new owners(CW)?
You are a lawyer in which country Andy111?
I have seen many messages on this thread that assert the court case was wrongly decided/allege bias/expect the appeal will be successful etc etc. But none of the posters seem to have read the judgement or understand why it was made. Let me summarise. Cine were allowed to walk away from the deal if there was a “material adverse effect” after the deal was signed but before the deal closed, but it was expressly agreed in the documents that “outbreak of illness” would not be considered to be a “material adverse effect”. In other words, the deal was that Cine took that risk. Covid was an outbreak of illness. It was Cine’s risk and bad luck to them, it ruined the economics of the deal for them, but they had already signed up to that deal. Cine also argued to the court that the business was not being run “in the ordinary course of business” (which was a requirement of closing the deal), due to covid. But the judge pointed out that did not override the fact that Cine had accepted the risk of “outbreak of illness”. They signed the documents. They took the risk. It went wrong for them.
I do not understand why so many investors seem to assume the case was wrongly decided. It is actually quite simple and most lawyers I know who looked at it agree it was correctly decided and reflects correct Canadian law (I am a lawyer, by the way). It might get overturned (I hope it does), but there is nothing strange or unbelievable or obviously wrong in the judgment.