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Correct, counter suing - that alone tells you they have legal recourse to do so.
If I was a desperate ramper I could argue they are in for a windfall of BILLIONS from Cineplex. I won't however.
I'll report the fundamentals.
Im sure I read that Cine are counter-suing?
I don't know because it is sensitive and there is a thing called disclosure which must be maintained.
What we do know is it was not a SINGLE breach but MULTIPLE. Breaches (plural).
£28.3m vs overpaying BILILIONS for something work <$500m?
Cineworld is counting their blessing and Fitch (IDW will come along soon) even posted that they have COME OFF the Negative watch because of this GOOD news.
DYOR.
It's not a deal until it is done !!
Anyone has a right to walk out
Cineworld avoided an increase of $2.1 Billion US in debt.
From their contract:
"Should the Acquisition Agreement be terminated under certain circumstances. The Major Shareholder has also agreed to pay an additional breakfee of up to £28.3million"
If you ask an investor if they want to go ahead with increased debt of BILLIONS vs paying £28.3m, the answer is quiet clear.
To buy Cineplex at 4 x the premium when their value reduced to just a quarter - would have been financial suicide.
a) Cineplex was valued at $2.1 Billion - it now worth a quarter of that ~$500million
b) Cineworld would have paid a 4 x premium had Cineplex not breached their terms of the deal - thus it is a blessing Cineplex did so
Poker I could not agree more.
It will depend on what those "technicalities" are - needless to say, legal and consultation costs will not be cheap and all fall to the bottom line in terms of cash outflow.
It is a headache they certainly do not need right now
Tidd83
I suspect Cineplex shareholders are pretty p*ssed off the deal collapsed as they thought they would get shot of Cineplex before the disaster of Covid.
..but it fell through because of clauses in the contract and I suspect the Cineplex BOD want to come across as fighting and not to be seen as failing to see the deal through
The argument must be fairly clear ..in terms of the contract...so ..there may be some drama ..but then an out of court resolution seems more likely
In my opinion
Something else to consider is the legal spat between Cineworld and Cineplex following the collapse of the deal.
This is a massive headache Cineworld do not neet and cannot afford, the legal case alone will have a detrimental effect on their cash positions and who knows what a negative outcome will do.
The complexity of the deal structure and who is right and wrong is not clear but there are certainly grounds for review. In my opinion Cineworld changed stance based on the economics and to try and keep their own house in order, perhaps looking for technicalities to pull the plug.
Whether those technicalities warrant the cease of the deal who knows but it does seem somewhat convenient to walk away at such a time of unrest.
Legal case, heavily indebted, low customer base, struggling revenue streams, increased costs to open, no visibility on revenues.
It makes you think.