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Yes that’s what I was referring to. I’m not worried about it. I’d rather be diluted 10% than CINE run out of money. :)
Well, those are equity warrants exercisable at any time in 5 years and don't think they would convert anytime soon as there is little gain in trading them at current levels.
Also compared to AMC, 150M warrant conversion is nothing big...nothing to sweat about.
23 November holds the details of the borrowing that may well see current holders diluted by 10% (not a major concern really).
Is this what you are referring to -
"The Bond will carry a coupon of 7.5 per cent. per annum and will be convertible into ordinary shares of the Group. The initial conversion price has been set at $1.7620 per share (which equates to £1.2850 per share based on a USD:GBP FX rate of 0.7293) representing a premium of 25 per cent. above the closing price per Cineworld share on 24 March 2021 (being the last business day prior to the date of this announcement)."
So the conversion price is £1.28!!! That means at some point in future when they want to convert, Mooky had them agreed to pay £1.28 per share! Why did the bond holders agree for such a premium conversion price? In future SP of £1.28 looks cheap. You may say that bond holders don't care about the equity but they could have asked for a price lower than that. After all, cinemas are going to run for next 100yrs!
smalltrader CINE shares are/will be diluted at some point. Part of the financing deal late last year involved issuing shares so we’ll be diluted by 10% at some point but I can’t remember the exact details.
Just spotted your reply small. Hope you enjoyed the article.
Why folks wouldn't see an article on our largest competitor in our biggest market as relevant God knows. It should be essential reading as part of your research, before parting with hard earned cash.
Interesting how AMC have taken a differant route to solving the balance sheet problems caused by CV19 than Cine.
Share dilution v increased debt. The increased debt needs to be factored into any investment decision, but myself i see the risk/reward @ c85p as good. Again, very similar arguements were made about BT 12 months back. I more than doubled my investment on BT over that period.
Am looking at the same timeframe here.
Another comparison? RDSB & BP. SP crushed by the Poo @ $20 a barrel. Now $73 & am c30% up on investments there.
Just my take on things
Others may argue
Pig
Pig, excellent find about AMC! Obviously some of them here quickly dismiss anything that is said about AMC as they lack the ability to read full details so let me share what I found useful about that AMC link from SA.
The main thing to understand from that article is that CINE shares have NOT been diluted when raising the debt unlike AMC!!! If you look at AMC's free float it is almost same number as total outstanding shares whereas CINE free float is half of the total! Although Cine added $1bn debt because of covid but this debt was raised without issuing equity unlike AMC and that is the power of Mooky! That means the number of shares are still same as before covid so share price can go back to precovid levels despite additional debt of $1bn. This is the reason why some of us say that current price is undervalued but some of the idiots with half ounce brain say it is ramping despite being invested. These idiots don't understand technicals but say that current price is right because of the debt and those who are saying price going down to zero because of debt has no brain at all.
Also CINE secured covenant waivers until June 2022! We have Jhango still holding and few other institutional investors who bought cine this week -
https://fintel.io/so/uk/cine
The institutional investors and Jhango don't feel that Cine debt is a concern. We now have major Cine cinemas in US running with full capacity like in CA. Current price is ridiculous.
Not sure if this comparison has been covered here before. But will post a link here to an article on AMC Entertainment on the basis that they are Cineworld's competitor in their main market.
Article is mainly on AMC share dilution, but makes interesting reading re the general situation on cinema going in the US
https://seekingalpha.com/article/4435645-amc-dilution-is-real
Pig