We would love to hear your thoughts about our site and services, please take our survey here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Price rise*
Expect the market to absorb the positive news that Cineplex litigation has seen the first court date pushed to Sept 21.
We should be in for a good price risk, tomorrow.
My favourite one from the above RS2002 post is this -
It’s no secret that Hollywood has deferred movies to 2021 such is their appetite for theatrical release, rather than cut their losses and stream like PVOD.
Clearly they wouldn't defer the movies to 2021 if VOD is the way to make money. Analysts and others claiming that VOD will kill off Cinema theater is not true. Both will exist and many will not like to watch a movie like Gravity or Avatar in a small screen or any other 3D cinemas.
Also CINE has refurbished now with 4D experiences at several sites which surely will interest many families with kids. Cinemas are here to stay forever.
Just once the covid is gone, there is going to be massive bounce in stocks across the sectors and don't think investing in a fund is not going to fetch as much returns as equities.
To add: If I was a shorter, I would be very nervous and instructing my paid de-ramper squad to work over time.
The window for an exit is closing every day for them.
Regal set to reopen along with AMC, which has started to see a natural price correction will begin to translate to Cineworld very soon.
Fundamentals cannot be denied.
The current share price is where it is at because of the risk of uncertainty.
As that uncertainty erodes, the risk will erode and we can expect to see the share price to recover accordingly.
The best thing that happen was Canadian Group Cineplex breaching their debt covenants and breaking the terms of the Cineworld takeover.
It ended up SAVING Cineworld $2.3 BILLION DOLLARS in further 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"
To buy Cineplex at 4 x the premium when their value reduced to just a quarter - would have been a terrible outcome. No one, private or institutional investor could deny that.
Cineworld now stand to pay £28million as an exit fee - that is paltry compared to paying $2.3 billion.
If I found an extra $2.3 billion dollars in funding I would be elated as it meant I could weather the storm for a longer time should it be needed. Not that we believe Cineworld will need to, given their excellent negotiations with current lenders to increase the ND/EBITDA covenant test to 9.0x ratio, due December 2020. This means they only need to demonstrate earnings of 1/3 what they demonstrated in December 2019. Easily achievable given they were not impacted for most of the first quarter. Then we need to consider that lenders are aware of Cineworld’s proven track record to pass their covenant test. In December 2019, they scored 62% HIGHER than they needed to and sailed through. I imagine this influenced lenders to increase the 5.5x covenant test ratio to a very generous 9.0x.
That said the concern of litigation lingering over Cineworld’s head clearly spooked the market and investor sentiment.
Now imagine my elation to the news that the FIRST court date between Cineplex and Cineworld is set for September 2021.
Ample time for:
a) Cineworld to prepare an excellent defence to demonstrate that Cineplex did indeed breach MULTIPLE (not one) covenants of the Acquisition Agreement
b) Vaccines to not only be signed off for Phase 3 but see the inoculation and vaccine programmes of multiple governments under full operation. Trump has been quoted as stating he has the military prepped to deliver this in record time, as part of operation Warp Speed
c) Cineworld to have restored consumer confidence and a movie slate big enough to entice movie goers. It’s no secret that Hollywood has deferred movies to 2021 such is their appetite for theatrical release, rather than cut their losses and stream like PVOD.
I believe when this news makes mainstream circulation, we will see the market react accordingly but certainly for current investors this is fantastic news and will I still further confidence that they are in a good position to weather this pandemic as we JOIN global industries through it (read: this is not exclusively a Cineworld risk, as a certain deramper would have you believe so).
We are due a price correction very soon.