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This is way back on track to full health now.
Covid in all our territories will be over by mid summer.
Sit back and wait, gang.
Everything else is just noise.
See you at your exit points. :)
@HNS - I think there are different ways at looking at this. From the point of view of the annual finances I agree they have more than enough to accommodate paying the fine over say 10 years i.e. about $100m p.a.
However, this is equivalent to about half their pre-covid levels of profit. As shares are generally valued on their expectation of future profits the sp of any company that has the potential of seeing their annual profits halved for the next 10 years is going to take a battering. This is simplistic and the numbers are crude but just aiming to describe the order of magnitude and under any definition it is significant as far as what it means for the current sp.
Having said that the starting point for the sp is so low that to me that it still represents good value. Even if assuming the judgement stands a company still with $100m pa expected profit that is valued at just $600m still seems very cheap to me - especially with the judgement potentially being reversed or at least reduced. Plus there is the distinct possibility that post-Covid profit levels will be higher than pre-Covid levels which would offset some of the impact.
The main worry is that the settlement is not reduced and has to be paid out soon in one lump sum (as they don't have the funds currently to do this) and the wording you supplied on the judgement actually suggests to me that it would be. Rather like any typical loss of earnings judgement the future annual losses are converted to a present value and the damages are paid out as a lump sum. Having said that it would make sense for Cineplex to agree payment in instalments if that meant making sure they got the full amount. And of course the longer the appeal drags on the more they will be in a position to pay any settlement anyway. So it's a risk but I think a small one.
So in short I'm bullish for all the reasons above, and have bought more since the judgement, but can understand the drag the court case is having on the sp and the differing views people have on the company's value.
So back to normal life then in a matter of weeks?
Meaning cinemas fully open again?...
@HNS_77
Thanks - yes it was discounted to present value so the CAN$1.23bn would be a bullet payment. Paid over a period of time it would be more.
NewsHealth
Covid news - live: End of pandemic ‘not far away’ in UK as England restrictions ‘to be scrapped within weeks’
Ministers draw up plans to ‘scrap all Covid rules in England as early as March’
Stuti Mishra,Holly Bancroft,Matt Mathers
7 minutes ago
https://www.independent.co.uk/news/health/covid-restrictions-omicron-cases-news-live-b1995038.html
@ Wellington - Here is the exact wording from the judgement below
$163m - original annualised benefits accruing to Cineplex as per E&Y report
Then Mr Rosen does his calculations accounting for Covid etc (that new annualised figure is not presented in the judgement) and comes to a total of $1.23bn (CAD)
My simple understanding of this is that there was not going to be a sudden uplift of $1.23bn as a result of synergies but that it reflects an adjustment of the original $163.5 that E&Y presented as part of the package when CINE were trying to get the deal agreed with banks
[171] Prior to entering into the Arrangement Agreement, Cineworld engaged Ernst & Young to
prepare a synergies report (the "EY Report"). That report estimated $163.5 million in annualized
combination benefits to Cineplex, comprised of cost synergies ($88 million), revenue synergies
($72 million) and efficiency synergies ($3.5 million) that would result from the combination with
Cineworld. The cost savings to Cineplex resulted from, among other things, removal of the
Cineplex board, headcount rationalizations, and spending reductions on the operational side. The
increased revenues to Cineplex included additional fees from film studios to play trailers during
pre-show time, additional online booking fees, and increased concession spend at theatres.
[172] Mr. Rosen calculated that the present value of those synergies that were lost to Cineplex
when Cineworld terminated the Arrangement Agreement was $1.2366 billion (before prejudgment interest). His methodology was as follows:
• he identified the synergies using the EY Report;
• he utilized only those synergies that would have been realized by the corporate entity
Cineplex and excluded those that would have been realized by Cineworld or Regal. He
said that of the $176 million in total synergies projected in the EY Report, $163.5 million
was expected to be realized by Cineplex;
• he discounted the expected benefits to account for the delayed realization due to COVID19; and
• he discounted the future cash flows to a present value as of the date of breach.
I thought that the judgement had been calculated after applying a DCF to take account of the time it would have taken to realise the synergies, hence the delayed payment would be one of commercial negotiation rather than of legal effect.
@ Kick the Puss - UK court enforcement it is a very strong option - any enforcement of the judgement has to take place via a UK court (assuming CINE resisted which of course they would)
I don't have the link to hand at the moment but it was called the Canada and United Kingdom Reciprocal Recognition and Enforcement of Judgments Act and there are routes (admittedly limited) for judgements to be smacked down when they reach our shores and I found a decent number of those that were.
To be honest, I like most of you don’t have any faith in the integrity of the Canadian courts after their ruling on the original case.
Worse case we lose, the judgment “stands”, I have a feeling having seen the wording or the appeal that Cineworld will not comply and force cineplex to bring a case to the UK courts (if that’s an option)…..even then we could possibly pay £x per year over x years, which would appear reasonable given that all lost synergies would not be realised instantly (credit mountainous for that theory)
GLA
There is nothing contained in the judgement suggests an immediate liability of 1.23bn is payable - in fact quite the opposite - although not spelled out on my rough calculations it looks like those synergies are the total realised over 8-10 years
If this is judgment is eventually upheld and is truly expectation damages as stated "putting the wronged party in the position they would have been in" why should it be paid all in one go and force the sorts of measures suggested.
Assuming (by the time this eventually gets resolved) Cine has already got back to normal trading (if they haven't then this judgement would be the least of our problems!) then why should this have such a drastic impact on the share price if they demonstrate it can be paid over that period and the business can still function
From pre covid they had enough money to pay a healthy dividend and still had money left over and that was with a share price north of £2 so why would it be such a catastrophe if Cine have to pay this annualised (again assuming it is not reduced at all )
I am here to be educated so reasonable challenge and debate welcomed
Good morning.
Remind me again,
how much did cineworld pay to acquire regal? What was regals revenue pre pandemic?
What's there cinemas like compared to a cineworld experience?
You would pay £600 for it :/)
Well, the judgement equates to four times 2019s Net Income or 55p per share depending on how you view it and if upheld would likely result in a deeply discounted rights issue that would decimate current equity holders.
So to stretch your analogy, we are waiting to find out whether or not the Conway iceberg has holed us below the waterline, whilst others are counting the number of people sitting in the recently re-arranged deckchairs to watch the latest talkie.
Trick question as it's not 10% ;-)
1. Regal acquisition
2. Refinancing various CAPEX
3. Funding the running expenses during lockdowns
Quality post chilston.
Let the games commence
How this board is consumed by a court appeal that represents approximately 10% of debt.
It reminds me of a vision of where people are in an inflatable dinghy being circled by a shark, that doesn't actually eat humans.
Meanwhile there's a hole in the dinghy yet know one is really interested in that, even though... you can't swim.
Luckily in this instance, you're not far from the shoreline, so you won't drown.
Point is... you seem to be focussed on what i think is a slight pain in the backside.
Lets have a little play. How did cine get this much in debt? What caused the main debt?
Play along and i will give you some further questions, ultimately guiding you to why im invested.
Shorters are most welcome to answer as you will indirectly be helping me help you realise that youve probably made a big mistake shorting cine.
Blue day tommorow