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Great price now for those on the sidelines although I do anticipate (new prediction) this will hit 39-41p in mid-August. Hopefully saved many investors lots of cash with a better entry price with the outlook going exactly as I've been explaining in every post since June when rampers were saying back to £1 and talking of movies not being delayed.
Delayed blockbusters, delayed opening, 40's SP, July a write-off. 3 of 4 correct.
For the full house on June's correct predictions next, UK opening will have zero significant impact on SP.
The point is it underlines the sensitivity of open and closure, Cinema's are on the front line (or just behind the clubs and gyms) and should even a minimal number of cases reemerge when we are generally under control, to mitigate 52 turning into 552 Cinemas are at very real risk of re-closure.
Certainly something to watch out for, not saying of course every government / state will be as sensitive as the Hong Kongers but we will find out.
Further to Jenks789 link:
Nice article thank you. An important line: "And given the current rise in cases, there’s no guarantee those new dates will stick". As a result of the present uncertainty, this share is remaining in its trading range, bouncing off 52-53p 3x in 3 days and many more times failing to break this support level.
Will bottom support or upwards resistance be broken first?
Risk Register next few weeks (IMO off the top of my head):
Negative SP Impacts:
Delay in opening
Delay in Tenet
Further state lockdowns
Earnings Report Release
No SP Impact:
Cinemas open in US
Positive SP Impacts:
US Covid Control + positive sentiment in news
I do wonder even if we see a rise and all goes well with Tenet, theres an entire quarter of zero blockbusters I believe, at least a few months.
What for the SP then!
@NOFEAR > Your Quote "What you're forgetting that your posts are not taking the consideration that the markets are looking forward 6-12months and the very high prospects of having a vaccine with a 60 to 70% effect on the Covid-19 will mostly continue pushing the stock market further up into a recovery of the cycle "
Blimey are you looking at a Chinese stock or something with a similar name? What bloody recovery? What Vaccine? The 1st Phase 3 results aren't available until September. "Continuing to push up further"...whats pushing up?? The DOW for a day? WTF.
Where are you getting this carp lol it's hilarious. Never seen someone miss what is right in front of them by so much mate. There is no market looking forward 6-12 Months, that I can guarantee 100%.
@Nardniles agreeing with you too :) Good luck to you both.
Respectfully @NOFEAR I don't agree with any of your post and I personally think you're very wrong - and it's somewhat proven already.
The share price has dropped from £1.00 to £53p and you say the market is 'forward looking' and then go on to discuss the next few months and 6-12 months.
The share price has halved mate...what are you talking about? :) If we were looking at 6-12 months or a possibility of a vaccine (even those in Stage 3 won't be available to year-end earliest should phase 3 results be successful) then the share price would already have recovered, not be on a downwards trajectory.
I think you're acting in hope. Not too long ago Cinemas were to open, UK had Covid under control, the share price moved to £1. America then had problems, the market reacted and share price loses 50%. This is a VERY short-sighted market reacting to current situations, Mr Market couldn't care less about 6-12 months at present. It can't see beyond a few weeks at best.
My reference to shorter increasing their holding wasn't eluding to impact on SP, but sentiment. Apologies if that confused. So let me clarify, Institutions have increased their short positions, in total to over 7% now BECAUSE they too do not anticipate a recovery in the short term.
So many Investors here blindly awaiting the opening of Cinema thinking it's going to be the pivotal moment, I'm not sure how many times I and a few others have to repeat ourselves and advise it will have no significant positive impact on SP.
If much of Europe has opened, accounting (for example) 12% of Cine's screens, has the share price risen commensurately? No it's gone down.
The Aerospace sector has seen flights back in the air, have SP's of Airlines increased? Nope, they've gone down.
Greggs starting selling pasties again for quite some time now, cash in the tills, did the share price increase? Nope. Guess what happened? It lost 300 points since reopening.
As for the DOW up for a day or so, nobody cares. The market won't. Go to any US News website - headlines are not recovery. Or VACCINE FOUND!! Headlines are all worsening statistics, little US control and further lockdown potential.
Whilst we can possibly expect further US lockdowns or US states retracting back to earlier phases, further delays for the hospitality sector, no movie production in L.A anytime soon and Institutional Investors banking on further downside in the near term - you can choose to look away and focus on long term if you wish where this is very likely a solid play.
But as my post stated, this is to help those looking for re-entry or 1st time entry in the short term. And to provide my opinion of where I feel the share price is heading.
..on potential of further lockdowns, returning to Phase 1.
Never ramp. Never deramp. Just sharing info, unfortunately all bad news atm but when its good will share that too! Hopefully my recent non-bias posts will help find a bottom for those looking for entry.
Institutional shorters have increased their positions once again to above 7% total short, will support be broke and my bottom price advised 3 weeks ago be hit. Or surpassed. Make your own informed decisions.
Los Angeles is on the state’s list of counties being monitored for their rising case counts and increased hospitalizations. If counties remain on the list for three or more consecutive days, the state will require them to close bars and indoor dining in restaurants, along with most other indoor business operations, for at least three weeks.
The coronavirus continues to spread in L.A. County as officials Friday confirmed 51 more deaths related to COVID-19 and 2,667 additional cases.
There are 1,995 people hospitalized with the novel coronavirus in the county, with 26% in intensive care and 17% on ventilators. It’s a significant increase from the 1,350 to 1,450 daily hospitalizations seen four weeks ago, according to the Department of Public Health.
During a Friday briefing, L.A. Mayor Eric Garcetti reminded Angelenos that socializing and gathering with people outside of their households is still not allowed. He warned — as he did earlier this week — that the city could reimpose a mandatory stay-at-home order should the risk of infection worsen.
..Doubleheadedcoindummy and Sharefallderamper at your peril.
If we all went by Double's ethos of taking Cine's word as red and not forecasting the future of the company with the information available, there would be no need for this BB, Analysts etc.
To the plonk*r Sharefall who said "rather take a Boards opinion than a chat expert", yet again another deluded individual dismissing any downside and living by what a Board tell their shareholders. Clearly inexperienced & unaware of just how wrong Boards and Analysts can be. For goodness sake, this Board approved a carve-out exempting Covid and THEN sought to acquire a company through further debt when they are already riddled with £3bn debt, low operating revenue and £500m in debt servicing alone!
The focus should be on streamlining the Regus acquisition first to squeeze as much profit out of the expansion and reducing debt further to see material decline in interest expense payments and consequently increase net profits! At present the Revenue from Regus is being completely eaten up by expense servicing.....all from the P&L which is publicly available if anyone wishes to do their own research instead of just assuming everyone is ok because Cine said so.
2 decisions I wouldn't make. Covid Carve out & Cineplex acquisition (even before the pandemic). Both decisions Institutional Investors have commented on and wouldn't make themselves, even tried blocking, Analysts were concerned with....do some research! Hence, it is proven the Board can make stupid moves in my opinion, and thus we should indeed question their reason for exit, their decisions and their position in the lawsuit for our investment's future.
I try to contribute with a balanced argument, I love positivity more than anyone but I shelve my emotions for all investments and analyse performance, decision making and the SP as best I can with the knowledge sharing available. If I help even 1 person achieve a better buy-in price or to hold their investment in difficult times for a company which I believe will recover (a rights issue or £2bn in retained earnings should support) ...then I'm happy with that. Not a deramper or dismissive dreamer like these two numpties.
Pincer - I agree with much what you have stated.
On SP, my 47p bottom prediction from 2 weeks ago still stands but won't be surprised if lower should the low 56 and 53p support lines break. We could see 39p. My opinion that anything below £1 being a great buy-in also still stands. Hold.
...yet America looks like this, see link below. One can argue testing increase has lead to an increase in infections. Fair enough, debatable. But cold hard facts that prove the spread of virus in the US are the doubling of hospitalisations and transitions into ICU.
Then ultimately the unfortunate confirmation via Deaths, irrefutable. Yet to be reported obv due to the incubation/lag. The next week or so will be telling.
Will the Exhibition sector be allowed to open in 3 weeks across US states if scenes of death once again hit the mainstream?
Will Producers want to release Tenet & Mulan in 4 or 5 weeks if deaths begin to spike?
Would it make more sense to delay release of Tenet & Mulan to late Q3/Q4?
Governors & Producers today & in the weeks ahead are considering these questions, so should we.
In its 25-page statement of claim filed with the Ontario Superior Court of Justice Friday, Cineplex goes on to allege that Cineworld "deliberately failed to fulfill its contractual obligations", including by prolonging the government's review of the transaction under the Investment Canada Act.
But then cuts the deal 3 days before deadline. Why?
What was so severe that Plex didn't remedy when asked that gave the legal team at Cine the confidence to shut down the acquisition with immediate effect and not wait 3 days? Not waiting 3 days tells me approval perhaps was going to be received via the Canadian investment Act.
1. Cine had 2 opportunities to state to the market the covenants broken by Plex. They chose not to. Why? Are they not certain of their best defence yet? Playing cards close to chest? Unlikely, you have to disclose your defence anyway. If it was condition d) e) & f) of the closing covenants..then just say it! But they didn't.
2. We know their 'secondary' defence is MAE, on this basis alone - CINE will lose the lawsuit.
3. It's safe to say it wasn't the debt covenant. Debt wasn't to exceed ~$750m, given the lawsuit is claiming ~$664m for Plex's debt, I would take it the $750m wasn't breached. Therefore, this can't be the defence right?
4. The covenant(s) that have been breached therefore and will be the primary defence I believe are the seeking of approvals from both through the Competition Bureau and through the Investment Canada Act. This is a certainty they were not received as this is all that remained having received the Ontario Court of Justice & Shareholder approvals. HOWEVER, the deadline was extended to 15th June, yet Cine 'took an unreasonable amount of time and lack of best efforts to gain approval', as it states in the contract is necessary (if my memory serves me correctly) and pulled out of the deal 12th June. Plex state 'by doing so Cineworld deliberately failed to fulfill its contractual obligations & unilaterally Cineworld end the approval required under the Investment Act'. WTF!
5. Cine's rebuttal: Don't worry Stakeholder's, everything will be ok (I've heard that one before). Shareholders, Plex did breach multiple covenants but we can't state per the public contract which ones. Oh yeh, they breached MAE element of the contract too, you know the clause our dummy Board allowed to pass with the carve-out that Covid is exempt for termination!
Before anyone says 1 more time 'Cine are the 2nd largest Cinema chain in the world, I'm sure they have good reason' stop being so stupidly dismissive, blind 'hoping' everything is ok with zero understanding of the strength of Cine's defence. And a legal team that allowed Covid exemption!!! Do you not think Cineplex can also afford to pay huge retainers to the very best Law firms? They don't run shows from their Grandma's spare room ffs.
Cine's position STILL remains unclear. I feel with strong certainty the covenants broken which Cine can use with a chance of success won't be the debt or MAE, I believe the argument will pivot on 'approval required'. Plex explicitly mention they followed all covenants but Cine purposefully allowed Plex to break the covenant by dragging their feet using Covid as a reason to not progress approval quicker. Cine will have to prove they did take reasonable measures.
So just 1 element of all the info so far remains elusive to me...just what did Cine ask of Plex to remedy, that Plex couldn't, which resulted in Cine termination IMMEDIATELY, & not wait 3 days or 18 days respectively for approval or stop date deadlines to pass. Weird.
If I was you GMW I would ride it out. Certainly not selling at a loss, you have a great entry price without the benefit of hindsight.
I'd simply recommend for anyone to do their your own research, perhaps start by taking a few hours to read through the post of the contributors whose opinion you value, should provide 80% of the research for you.
Then take comfort in knowing you made the best decision you possibly could at the time, , whichever way it goes, so it was the right decision.
Yes it could collapse. Never say Never. Never invest what you can't risk to lose. Not a Risk-free play.
Or it will survive and return to pre-covid levels one day.
That's about the top & bottom of what anyone can tell you with near certainty.
...after divi moves to retained earnings of which I believe Cine have $2bn but not 100% on that, just what I read some time ago.
Also someone mentioned earlier it would take 24 years to pay off debt based on 2019 net profit/debt, this is an incorrect calculation and made by a reviewer also. As more debt paid = more net profit if all other P&L items remain the same & therefore exponential servicing of debt is not taken into consideration. Would happen much quicker.
To clarify, the balance sheet / financials of a company and their ability to operate vs the share price/market cap are 2 very different things. Many companies run on huge debt with high share price. Look at Tesla.
I’m hoping CINE’s statement focuses entirely on broken conditions of the closing covenants in the Agreement Arrangement, and then a few words on MAE. Therefore leading strongly with a non-MAE related defence, as it’s obvious MAE is very much a roll of the dice and we would probably lose on that basis.
This should spook Plex somewhat, then they would be in a precarious position to take this to court and lose everything. Hopefully dropping the lawsuit best case scenario.
All will be revealed soon.
You can reissue an RNS so did cross my mind they should retract/replace and add a date in they are terminating : 1st July! Happy days :)
Regarding ‘unlikely’, yes there must be good reason or correspondence Cine have that the approval covenant breach was not going to cured by the long top date so they terminated.
As the Cine statement on the 12th mentions “an unwillingness to cure the breach”.
Either way, a bit of patience to July would have helped. Now we have to deal with this:
“Cineworld alleges that a material adverse effect has occurred with respect to Cineplex,” it said. But the agreement “explicitly excludes any ‘outbreaks of illness or other acts of God’ from the definition of material adverse effect and all of Cineworld’s allegations stem from an outbreak of illness.”
Other approvals per the conditions had been received, only approval was outstanding from Investment Canada and unlikely it was to come before long stop date per the terms of arrangement, hence Cine pulled. Very likely this is the covenant breached! Great article from Canada media below worth a read, a timeline of events..
News of the $2.8-billion, debt-financed deal first emerged in mid-December, with Cineworld agreeing to acquire all of the issued and outstanding common shares of Cineplex for $34 per share in cash. At the time, it was expected that the deal would close in the first half of 2020, pending approval from shareholders, Investment Canada and the Competition Bureau.
Built into the agreement was a “go-shop” period in which Cineplex was allowed to solicit offers from other buyers. During a seven-week period, Cineplex said it contacted 52 third parties but no superior offers emerged.
By Feb. 19, the deal had been approved by both sets of shareholders and the Ontario Superior Court of Justice. However, within three weeks of that, the COVID-19 pandemic had hit North America. On March 12, Cineworld reiterated its intention to move ahead with the transaction, but, as Hollywood tentpoles like James Bond: No Time To Die saw their release dates pushed back, a growing number of voices in the investment community began to question the viability of the deal against the backdrop of a pandemic.
As early as March 5, Forensic financial analysis company Hindenburg Research spooked Cineplex shareholders when it went to Twitter to predict the deal may “fall apart or be reduced in price.” Meanwhile, in early April, reports out of the U.K. suggested that Cineworld’s lenders were seeking to block the takeover, with insiders suggesting the deal could still go ahead but at a lower price.
At the end of March, both Cineplex and Cineworld laid off staff as cinema operators across the globe looked to curtail costs. In Canada, Cineplex temporarily laid off thousands of part-time workers and cut the salaries of its full-timers and executives.
As recently as May 8, both sides had publicly stated that they remained committed to completing the transaction. However, the language used in reference to the deal was beginning to change, with Cineplex noting there could be “no assurance that the conditions to closing the transaction will be satisfied” by June 30.
Adam Shine. managing director, assistant head of research and analyst (media and telecom) at National Bank Financial compared the deal to a game of football stuck at the one-yard line. “For much of the past three months, the takeover of Cineplex by Cineworld was basically stuck at the one yard line. With really only one more play to run, just get Investment Canada Act approval, WHO’s declaration of a pandemic on March 11 turned things into one endless timeout or rain delay. Suddenly one team had an out and it wasn’t entirely obvious how officials would manage through the process,”