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The certainty is Cineplex has started proceeding, it was coming, now it's here. The uncertainty for both parties is the result.
Hopefully the certainty of opening on 31 Jul will give a boost coupled with lower infection rate etc and possible vaccine being muted will aid the leisure sector.
CINE is alot larger and therefore "should" have more room to manoeuvre.
See what 0800 Monday brings, it'll be a crazy first hour with potential for fear or stop losses being triggered. Give it time to settle in. Dip in price and others will buy therefore making a market and opportunities
putmeonlist.. thanks for the filing details.
Have to remember cineplex are facing great uncertainty now, also being counter sued by cineworld. Think they're shareholders would accept a lower deal over nothing.
ta mate.
Damo - hi mate - have a look at my earlier post taken from Globe & Mail (Canada) from 13 hours ago - puts slightly more flesh on the bones re actual filing details. Cheers. Me personally: holding long term as was always my goal.
The FT reported "When it last reported figures in February, Cineplex had net debt of $625m."
It's reported that Cineworld's cash burn is around $100M a month...so I think it's fair to say that by now Cineplex would be not in the best position to keep the debt threshold above the requirement of clause 5.
Apologies....they HAVEN'T cited clause 5...but it is suspected.
Clause 4 breach is still the kicker.
Cineworld have already cited reasons for the basis of defence as per the last announcement..
"Cineworld has become aware of certain breaches by Cineplex Inc. (“Cineplex”) of the
arrangement agreement relating to the Acquisition (the “Arrangement Agreement”). In
addition, a material adverse effect has occurred with respect to Cineplex."
The primary reason they have pulled the deal is because of a breach of clause 5 - debt, with the clause 4 - MAE (COVID) breach being the kicker, so to speak.
https://www.cineworldplc.com/sites/cineworld-plc/files/cineplex-inc-acquisition/update-on-proposed-acquisition-of-cineplex-inc.pdf
I agree with the uncertainity Haich, though in terms of worst case scenario it seems unlikely to me that a court would order cineworld to pay 2 billion to cineplex...just seems like for cineplex that would be too good to be true, carry on as normal but with 2 billion in the bank, and on cineworld too harsh.
The key point is that the uncertainty will hinder any sustained rise.
Just to be clear having said all that, if I was holding at present I personally would not sell.
That is an excellent synopsis Hiach.
Managed to buy in at £1 and 90p previously...but brought the average down to 68p from bigger buys last week after moving safer funds into this. Maybe could have averaged down more if I had delayed but who knows...but I'm in with around 20k at 68p, it's risky obv but if that can eventually double than for me would be a great profit.
"Cineworld wouldn't have pulled the plug if they didn't have certainty they could legally terminate the deal, their Legal team have the minerals".
Yes I agree. But we're missing the point here. There is now a great deal of uncertainty.
The market does not like uncertainty.
Let's look at the worst case scenario.
Rule number 1 - never go to Court! Yet if Plex & Cine don't come to an agreement, perhaps Cine no longer have the funding available to purchase Plex for an out of court settlement, we go to court. Anything can happen in that Canadian room. If Cineworld lose, they have an extra $2bn debt with no assets to show, cue debt restructuring and all of us lose all our money.
Yes Cine have a quality Legal team, but wouldn't Plex also? Equally they wouldn't be claiming $2bn if they didn't feel they held a strong position.
Now do I think this will go to court. Possibly.
This will depend on Cine's strategy & funding situation since Covid, perhaps they don't intend to purchase Plex cheaper, they don't wish to acquire the company at all anymore. No out of Court settlement.
Do I feel this will cause uncertainty. Yes.
Will this detrimentally impact the share price. Yes.
I'm not as concerned if Cine's objective is to acquire Plex at some point, I'm sure an early settlement can be reached.
However if Cine's strategy has changed, there will be no settlement out of Court & this ultimately will lead to stepping over the threshold into the Court of uncertainty.
If so, I believe Cineworld will unlikely cite MAE (low success rate & Plex have that covered) but in agreement with a few previous comments it will be due to breach of closing covenants, number 5) relating to increased debt sounds likely.
The path ahead is unclear at present, therefore the worst case scenario isn't off the table just yet - we've seen bigger brands fall. Unlikely as this is for Cineworld until uncertainty of the situation is reduced, investment into our firm wont be in confidence and therefore the shackles will remain on the SP.
I miss the days of the "overhang" stopping it getting to £1.25!
Agreed, I’m not laughing JBaumer.. I went from 17% down to 25% up. Back to 14% down...
WALLY!!! Got carried away with the 1.25 plus talk. It’s basically been a bear market since we held at 1.00 for that Monday.
Yes, the US industry completely drives cinema in the UK. There is no point in opening up if there are no new films to show.
Im certainly not laughing @JBaumber
I was in on the low 90s, came completely out 3p higher for another opportunity that came up, & then the slide happened.
Pure luck & zero skill on my part., wishing you green/blue soon in Aug/Sept
The trend may well already be improving, albeit tentatively.
Fridays new case numbers were 55,000, Thursdays were 57,000. Consider that this time last week saw a significant jump from Thursday to Friday.
It’s too early to say, but there are tentative signs of the rate of growth slowing down.
“ 'Super Saturday': Traffic chaos on the motorways as millions make first post-lockdown getaway”
Public will be there, movies will be there, screens will be there.
It seems the *only* real factor holding the SP back is the current trend of COVID in the US. Which will sooner or later improve!
According to the court filing, Cineworld’s correspondence cited reasons for terminating the deal, including that Cineplex had deferred some payments to film distributors and studios during the pandemic, along with rent, damaging its relationships. Cineplex acknowledged the deferrals, but said in its filing that the relationships had not been harmed.
Cineplex also claimed that Cineworld had cited cash management as an example of the Toronto-based company operating outside of the “ordinary course” of business. Cineplex wrote that its “reasonable efforts” to preserve the business through the crisis were done “in good faith.”
None of the claims have been tested in court. Just FYI, as previously said: way above my pay grade. I am sure that the best corporate litigators around would have advised the brothers in this matter and its watertight.
I average 91p (can hear the laughs)... I tried getting in and out for a quick 5-10% and it bit me on the ass. Now holding for long term recovery and this hasn’t worried me. CineWorld wouldn’t have pulled the plug on the Cinepelex deal unless they were sure they were within their right and could defend the backlash. Ok, it sounds bad and will be published negatively in the media, investors will sell off in a panic but that’ll be short lived. As long as they survive COVID (which they will) and the world finally gets to grips with the whole virus situation / everyday living (which we have no choice), the SP will be back up to previous highs and I will see green again. Until then it’s a paper loss and just tied up money.... onwards and upwards.
I agree with M00la & Hosai
I'm holding & not panicking, will look further ahead, to at least Aug/Sept , slightly easier for me @60.5p average, but even the guys higher up the average ladder, don't panic on this news I would suggest
Definitely M00la I will not be taking a loss and selling out. Just going to have to be patient. Thanks for your post.
We all thought when they backed out of the deal a few fridays ago the sp would rise but it didn't...perhaps due to the legal action or more likely that covid in US is the bigger factor weighing on the sp.