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If you looks through the court documents this is actually addressed and it's because of the different jurisdictions that they have only included the US, UK and Jersey within the chapter 11. To include the other ROW countries would have make the legal cross border complexities too onerous. It's also the reason the DIP lenders were able to purchase the ROW debt - because Cineworld would have been in default with no C11 protection.
Oh, BTW as this thread doesn't seem to have descended into the usual lunatic ramblings of this BB, one other thought I've had that is a small piece of good news is contained contained in this piece:
https://www.costar.com/article/691750159/us-bankruptcy-judge-grants-cineworld-access-to-less-money-than-movie-operator-wanted-as-it-explores-future
Looking at the cashflow through to Q2 (IIRC) next year it seems clear that the lenders wanted Cineworld to take $1.94bn in emergency funding but the judge would only allow $785m.
At first pass this looks like a bad thing, but on reflection it seems that the judge was stopping lenders loading up Cineworld with new debt with a 20% pa rate to swap for their current debt at single digit interests rates.
That's a good thing and suggests that the judge won't let the creditors completely run the table.
@WoW
Any idea what that means for shareholder rights in the UK?
I know that the US likes to flex its extra-territorial muscles, but hard to see how that works in practice.
Real estate optimisation interesting read
https://www.ioptimizerealty.com/blog/what-is-cre-optimization
ATB ;-)
A debt for equity will definitely be taking place. People need to get their head out of their arse.
The Times have already reported that this is Cineworld’s aim. Remember, The Times have been spot on pretty much throughout this whole process. They have insiders leaking information to them.
Tell HSBC bank and Bank of Israel. They do not do debt for equity swaps and are the two biggest shareholders. The Times can print want they want. These two have consistently rejected this. The other lenders will need to pay off all the money owed to them, to make a debt for equity a reality.
So what are you suggesting will happen then Ian?
Hi wellington - many global companies have been though c11 and D4E. It would be like saying the cineplex deal apply because it’s in a Canadian court - it does.
I remember when Hicks and Gillette owned Liverpool FC I’m pretty sure the issues they had at the time all went through the US courts not the UK.
We live in a global world I guess.
WoW:
"it is expected that any de-leveraging transaction will result in very significant dilution of existing equity interests in the Group and there is no guarantee of any recovery for holders of existing equity interests."
That statement looks conclusive.
It does not carve-out any "subject to shareholder approval to any such dilution". It appears to be saying in effect this is going to happen with you or without you.
My understanding under CA 2006 is that equity shareholders are consulted perhaps with amends to Articles of Assoc. etc and other equity docs.
But I query, if that were the case here with CW, then why that unambiguous language?
It makes no sense except if C.11 changes that position. Which I think must be the case. Either that, or the author of the RNS (as copied in the bundle of the Court Papers IIRC) has made a serious blunder. That must be unlikely.
Time will tell
GLA
Melonhead - Ignore Ian he comes up with some proper corkers and seems to have a hard on for HSBC for some reason.
I’m pretty sure they are not shareholders, well not directly anyway. So not entirely sure what he’s going on about this time …
Quiggers - interestingly (or not!) when I was Googling some of the finer details around C11 there was an article I came across from Freshfields I think that stated that the UK is looking to write an alternative to C11 whereby the shareholders have a vote in the outcome as well as the creditors.
I’m not sure how it would work in practise but I guess the principle in that shareholders should be creditors too, albeit at the back of the queue.
see CA 2006
Section 551 Power of directors to allot shares etc: authorisation by company
(1)The directors of a company may exercise a power of the company—
(a)to allot shares in the company, or
(b)to grant rights to subscribe for or to convert any security into shares in the company,
if they are authorised to do so by the company's articles or by resolution of the company.
I have not looked at the CW Articles of Association.
I presume the Directors have this power - hence the RNS as drafted etc.
But I might be wrong. Others closer to this will know more.
GL
Stock exchange has a ruling limiting the number of shares a company can issue. To stop abuse by companies issuing endless shares and making shares owned by share holders worthless.
I believe Cineworld are at there limit. Which is why they were looking to create a new company to bypass this.
But the judges ruling to block the lenders paying off their loans, kind of stopped this in its tracks.
By the wording from the lenders lawyers about representing 52% of the lenders. Which matters little as the other 48% hold over three quarters of the debt. But the other lenders are against the actions of these lenders in court. So the 19th will be interesting. But the 48% hold the power in the negotiations. So I expect no deal then.
In bankcrupy proceeding through the directors in the UK lose full control of e company - the administrators take over.
In the US it’s slightly different as the BOD are still allowed to run the company but it’s supervised by the courts. If you have a look through the court docs they have to lodge exactly what they are spending money on and their are various restrictions on them and rights to the lenders. They have to have the courts approve a lot of stuff.
I’m not so sure in bankruptcy they normal rules regarding shareholdings apply otherwise a D4E would never apply.
Everything I have read suggests the DIP lenders and other creditors have control here.
Not sure there at there limit Ian there was a mention of it in there last report.
Cant remember the exact details off the top of my head but its alongside the part where they were suggesting under better circumstances of buying up to 10 % of stock back.
ATB
" Stock exchange has a ruling limiting the number of shares a company can issue. "
Maybe so..
But see SYME - 42 billion (and counting) at the last count.
So if you are right, the rule does not seem to be working too well?
Number of shares that can be issued depends on numerous factors.
https://find-and-update.company-information.service.gov.uk/company/05212407/filing-history?page=1
see 17 May 2022 PDF 4 pages and section 551 notice would appear to suggest that Directors powers are not unlimited in terms of the power to "convert any security into shares".
Perhaps the author of the RNS presumed that by analogy, given the alternative to have one`s leg amputated or die, the patient would choose the former over the latter.
Clarification to CINE might be in order for those interested.
GLA
@poorinvester wrote:
“Wolf, I have been in business a long time And I explained to you a long time ago, I’m an expert in maths.” (Tuesday 13/9/22 at 2310)
This is a classic. He probably believes it, too. It’s hilarious. I have no doubt that his expertise in maths matches his expertise in, um, spelling, grammar and punctuation!
“Let me simply fly for you...”
LOL! Both condescension and low intellect in a mere five words.
“The house will not be sold for it’s future value, it will be sold for market value.”
What rubbish! It will always be sold at market value. This is one of many examples which show that poor invester really doesn’t have a clue. Not in the slightest. But he’s too challenged to realise it.
He can’t even spell his own name and can’t string a sentence together but he thinks he’s a maths expert, stock market sage and now a debt recovery expert!
The funny thing about syme is the rampers all voted for the creation of billions of extra shares in one of the AGM votes to allow the very CLN that has killed their investment.
Literally turkeys voting for Xmas. I got out at 0.34 but can’t believe how many red flags is swept under the carpet.
It’s literally written the text book for investing red flags.