Member Info for ElvisRocks

Hello All

With the chief restructuring officer last week asking the judge to defer finalisation back by a further three months to April 5, 2023, in reality is this share going to do nothing before that time - I can’t really see an RNS coming out before then.

I also suspect the directors will take this right up to the wire as they don’t need to publish results (auditable with a business viability statement and continued compliance with the listing rules) until 30th April 2023 by which time everyone has got their ducks in a row about the restructuring plans. Of course they will be on it like a bonnet before that time all over it like a rash

Any view from anyone who thinks we will get an RNS before 30th April?

HNS, a well written post with good arguments you make, so thank you

This will not go into liquidation, with so many people involved in the C11 Process, can you imagine the alternative, what assets will banks get back for their money, a few movie chairs in the theatre and a bit of spare popcorn and cappuccino mugs …

Another reason Wolff why all those going concern statements you bang on about are a mere compliance tick box statement….

Maidit, I admire your improvisation on drafting your (own) lengthy 9 September RNS below when there wasn’t actually one, you obviously follow the same leaf in my day book on that tune, Wolff is from the legalise community and can’t see there is actually another take on this from “one side onesie” that Wolff wants to perpetuate on this.

On another note Wolff, why did you continually ignore the role of Investec until yesterday when it became an unmissable obvious …

bore bore bore wolf, get with the pace on going concern statements, don’t pretend to be a Big 4 Partner accountant/ auditor when you are not …

Yip, 100% realise in C11 to avoid bankruptcy, I could have wrote that RNS whilst eating my cornflakes, the bit that (personally) grates me is the gravy train lawyers and accountants, particularly London centric ones. The same “may not turn out as expected” was in this weeks MUFC RNS equivalent that “ there may not be a sale or equivalent transaction” … but that’s what everyone is working to. In fact, I think a 5 year old could write that RNS. Plus you’ve got Listing Rules to observe.

Why could they not say “we are doing XY and Z to avoid bankruptcy which may or may not come off” or whatever sleeve words equivalent can be found rather than the one direction you “may not get back anything”. It’s patently obvious if they are about to spend tens of millions of $ that something, not necessarily bankruptcy, will happen.

Anyway change topic, what are Goldmans doing in this transaction, they are named as a case specific party on page 56 of docket 1041, in the same manner as Investec are

Get with the pace Wolff,
I’m guessing are not an auditor, Big 4 Partner or member of the regulatory community as to how these decisions are made, e.g “prudency” as to a making provision went out with the dinosaurs, going concern auditors are all over it, goodwill they are not, here an example from this year

I wont be paying any attention to what’s in Cines accounts on going concern, the CP issue, only the goodwill judgement is important to me and we won’t know the answer on that as I would expect Cine will take publication of their annual accounts to the wire and take full advantage of the 120 rule and publish on 30 April 2023.

https://www.frc.org.uk/news/april-2022-(1)/sanctions-against-deloitte-llp-and-john-charlton

It’s why I continue to argue the RNS and certain wording they put in it was a box ticking exercise. The direction of travel is the lawyers costs bill.

Wolff, a bit amateurish if I may say so on the accounts comments. Even since the FRC about 8 years ago forced through changes so that the audit report had something in it (rather than a binary yes/no report) plus worked with the investment community of the viability statement (I think now called the solvency report), auditors now have a “way out” so if contentious matters are in play like the CP judgement someone can’t argue

The big 4 have essentially argued (eg Parliamentary Committees) that they pretty much underwrite capital markets so they want a quid pro quo and if they qualify a listed company it is a self fulfilling prophecy, eg in the case of Cine find enough evidence to support going concern and disclose what’s been done you are ok. Limited liability of the Big 4 has been tried and tested and found a non starter.

That’s why they are pretty much covered on going concern type issues. Where they still fall down is on goodwill assessments.

I once attended a meeting with Moodys who would love more forward looking information, they are never going to get that from an auditor, certainly in my generation. I once thought ESMA may try to forge a solution, including with the rating agencies but Brexit blew that out.

So in simple terms, Cine’s debt may well have been packaged up into a more sophisticated financial instrument (I couldn’t care) but if they - Cineworld Plc - do not have traceable listed debt, someone has effectively “paid” for a positive rating statement even if it is only for the DIP debt.

This is much different from the garbage (one sided, self serving risk averse statements) you see in an RNS. Yes they have to say such in terms of the listing rules, but what I have tried to do in this forum is draw attention to the 200 page lawyers bill, which is the direction of travel to what is happening.

Wolff, in support of your feedback on what Moody's are / do and why such a published note may happen, do Cine actually have any traded debt on LSE?

On a similar point Hexam, Cine has $5bn of Goodwill. If the company is worthless, this should go to zero and it’s one of the few things I’d be interested on a big 4 auditor view on (as they are supposed to crawl all over it but which we won’t know the answer for sometime). Goodwill was a major issue certainly on Thomas Cook, I think Carillion too, that the regulators announced whole company investigations into.

Wolff the point here was to raise awareness to generally positive and upbeat commentary of Moodys which contradicts the one sided totally risk averse statements being made in RNSs, and propagated by lawyers and big 4 risk management departments along the lines of “no equity recover can be guaranteed” - the type you were trying to keep hanging on about last week

Moodys, S&P etc have the same quality control procedures over public statements, here they chose to be positive, not negative as you were drawing out and me pushing back against.

I’m with you Hexam, all very boring as you say, the debits and credits of lease payments is now called “right of use assets” (in the main), I’m currently doing some investigation work for a major retailer and someone mentioned this to me the other day but I never got round to looking at the detail.

I was being lazy in not understanding IFRS16, Note 20 to the accounts summarise it perfectly, also showing in one place the leased asset value versus leased liability value ($4.04bn) to be precise

The right of use assets of $2.2bn odd are pretty useless to anyone, money spent by Cine on someone else’s asset, installing screens and movie chairs in someone else property - in other words who would want that asset if Cine went bust, this plus the major production houses, is a good enough reason to me why Cine won’t go bust and doesn’t justify its current share price

PDF Page 56

Hi Both

It’s a long time since I looked at operating leases v finance leases and now right of use assets accounting under IFRS 16 so why have Cine capitalised $2bn odd (after years of depreciation) for an asset that will ultimately not be there’s.

Also buried deep in the Appendices of yesterdays docket about appointing a special conflicts advisor are reference to multiple banks, DIP lenders and other banks / banker references but buried at PDF 56 are case specific interested parties (Investec and Goldman Sachs). Wolff you didn’t give me enough credit until today on the relevance of Investec, but what is the role of Goldmans?

https://cases.ra.kroll.com/cineworld/Home-DownloadPDF?id1=MjMxNjkyNQ==&id2=-1

Understand totally the situation on PI in HL nominee accounts, was more when you take different shareholder groups in 5% increments it drives (any potential) bidding process so close to the 20% or 30% thresholds - the article I saw, struggling to refind it, talked about use of the whitewash procedure

Re HL nominees shareholding 12.9% (understand who they are) somewhere I’ll have to dig out where, I saw an article saying these “presented a problem” to decision making going forward, I’ll try dig out. So who do you think holds shares, as reasonable size shareholders, that Mooky can approach beyond his own and the nominees (totalling 33%) that he can, if not already, “act in concert with” - if you get to above 30% you have to make an offer for the lot

In other words that may be behind the (very) subtle message/posting on approaching other shareholders in the 11 November posting

Thank you Hexam, understood (I think) on DIP and the different loans have different class of rights in all this (ie do not rank pari passu), is it not the DIP Group with $1.94bn who now have the upper hand in negotiating due to C11 Status probably assisted by the Chief Restructuring Officer at Alix Partners (this guy James Masterham) to get the other $3bn in Ad Hoc to play ball?

https://www.alixpartners.com/our-professionals/jmesterharm/

I wouldn’t exactly say I’m relaxed about the $4bn lease liability - sounds like each lease is being renegotiated, the other side of the balance sheet is $2bn odd of lease assets (being depreciated) that they will eventually own when they pay off the long term lease, years ahead.

Re various Qs from overnight

Moodys- either they were asked to by Cineworld or by a lender to review the quality of the debt and have given it a B1/grade with quite upbeat comments about the company, the best I’ve seen in a long while. Ie they are not C grade (junk)

https://www.moodys.com/sites/products/productattachments/ap075378_1_1408_ki.pdf

Investec - that may be one possibility, Cineworld could be divesting of Regal maybe? Somehow Investec are involved at close quarters with FCA/Takeover Panel

Shareholders- Mooky 20% is held through the Dutch NV Global City Holdings I think, so what is the 20% HSBC shareholding?

https://www.marketscreener.com/quote/stock/CINEWORLD-GROUP-PLC-9590220/company/

One further point I saw last night, only 2 weeks old from Cine investor site on its website, dated 11 November 22 (ie post dates the lawyers bill) following on from 22% voting against directors remuneration, maybe a Plc listing will be retained after all? The key part sentence is “….whilst Cineworld will continue to consider opportunities to engage with major shareholders….”

https://www.cineworldplc.com/en/investors/shareholder-information/agm-and-gm/year/2022

Morning Wolff I’m pretty clueless about the debt side of things, but do think I can understand and propose reasonable arguments on the equity side, ie I am not smoking something (about the slaughter and May lawyers bill)

Let’s have a redraw and start again.

https://cases.ra.kroll.com/cineworld/Home-DownloadPDF?id1=MjMxNjU5MA==&id2=-1