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Hi Allkap,

I'm not sure that Bloomberg forecast is up to date? Or maybe they are talking about loss after tax (which is lower)?

The $700m loss before tax I quoted is the figure CINE have already reported. There is no way that the missing months of July, August, November and December will pull it back anywhere close to $380m but instead will increase the $700m further - maybe close to $1bn. We'll soon have the November actual figure to help judge more.

Btw Capex doesn't impact profit in the year it occurs so something else is behind the drop from 2018 to 2019.

"$1.2b debt and $17m monthly debt repayments for equipment running at a big fat loss and needing to be completely replaced in a few years time is totally untenable."

Agree - which is why a lot of it will disappear and be replaced by equity.

I also agree that you've called Corz superbly so far and I don't think that at any point I've disagreed with you on it - until now - as I think you may be calling the final demise too soon given they seem to have a plan agreed with lenders to move forward.

Of course they may still collapse in the coming days or weeks but they also might just have found a way out (though it might not be so rosy for shareholders because of the dilution coming).

Maybe it is best to move on though - but what's striking here is the similarities to ARB so it will be interesting to see what happens to both companies over the next few weeks and whether they continue to follow a similar path.

HC - I'm not sure why you are so convinced Corz will go into administration. It's received DIP financing of up to $56m from the lenders which is not a usual precursor to expected administration and seems to have put together a plan with creditors to emerge from Chapter 11 with significantly reduced debt. The catch for existing shareholders is the price they will have to pay - heavy dilution.

I don't think it will be as nearly as easy as Corz make it out to be but at least they have a plan and one that has seemingly been agreed with the majority of lenders. This is much more than we know of for ARB and yet Corz now has a similar mcap despite it having a plan and being a much bigger beast. I'm not put off by it going to Chapter 11 as that give it protection whilst it tries to sort things out but there are still warning signs for me:

- It will still be encumbered with large debt in what is still an unprofitable industry at the moment
- It bangs on about being significantly cash positive but I think this comes from the PW school of ecomonics
- The dilution could almost wipeout shareholders even if the plan is successful
- And of course there is no guarantee the plan will be successful

Regardless, there still looks like there may be trading opportunities but more than anything I am put off as I don't want to be stuck in there over Christmas when the markets are closed or, even when they are open, I have little desire to follow the price (which could move very sharply either way).

That's a matter of opinion - and it's also yesterday's news.

No RI I hadn't seen that piece on Cineplex so thanks for that. Cineplex and other, smaller chains have seemingly fared better than the giants AMC and CINE judging by first half results but that's not surprising as the bigger the chain the more it needs depth of content - though the articles suggests CP have been creative regarding that too by placing more faith in international films.

November was buoyed by Black Panther - though CINE still didn't expect to be cash flow positive for the month but they were expecting December (and January) to be thanks in no small part to Avatar 2.

Just ignore him. He was here about 6 weeks ago spamming the board with exactly the same things. It was 'last orders' then at 4p or so. Apparently not.

"and allow them to recover to a positive EBITDA in 2023"

EBITDA is already positive but is a misleading and arguably meaningless metric for CINE. It is cashflow and Profit Before Tax that are negative and that they need to see a turnaround in (which should hopefully come in 2023/2024).

@tedzkat - I'm not sure what kind of breakdown of the $6bn debt you are looking for but the figures for the end of October gave total loans and borrowings of $5.96bn split:

US - $5.29bn
UK (excl Picturehouse) - $0.64bn
Picturehouse - $0.03bn

Another way of looking at it is that they had just over $5bn of debt entering into Chapter 11 (excl RoW debt) and took on $664m more from the DIP lenders and transferred across $271m for the RoW debt - so again comes to around $6bn for the parts of the company now in Chapter 11.

You mentioned in an earlier post that they should be able to pay off this debt easily with the sort of revenue they are generating but unfortunately all the revenue is currently used up paying for the costs of running the business and so none is left over to repay any debt. In fact the revenue is not quite enough to meet the costs which is why the $664m additional funding was required i.e. to keep the company operating and avoid it running out of cash.

Hopefully in the second half of next year they will start generating a positive cash flow and so have the option of paying down debt should they choose to do so (or need to) but that also depends of course on what form the restructuring takes in the meantime.

Not me, but there's always tomorrow...

Hi Huss – I think CINE are some way off breakeven just yet as the profit figures that they have reported so far (Jan to Jun plus Sep and Oct) show a loss of around $700m before tax. Even with Avatar the missing 4 months are likely to push this loss closer towards $1bn for the full year.

I agree though that 2023 looks a lot better and although they are still forecasting losses in the first half of the year hopefully by the end of 2023 the business will be much closer to breakeven or even return to profitability.

It also does look as though they are determined to keep CINE intact but this just means not selling parts of it off, it doesn’t imply existing shareholders will retain 100% of the business. Given that profitability is still at least a year away, debt is now $6bn and interest rates are rising I think it likely that some debt is written off in return for a substantial share of the equity. The actual write-off and percentage of equity (if this happens) will depend on the Ch11 negotiations between all parties and in particular the lenders who will be pushing for an outcome they think gives them the best chance of getting the most return. As long as we at keep at least something though then I think we won’t be in a worse position than we are today – and hopefully we come out a good deal better than that!

Of course just my thoughts and it could all play out very differently including parts, or all of CINE, still being sold. It’s just a waiting game I’m afraid until further, hard news emerges.

HC - Well done for calling it! I still think it could end up anywhere and so am tempted to trade it at this kind of price but any trade is pure chance and I'd probably have more fun sticking it on the horses. I think it will appeal to some of the gamblers out there though.

To be fair I said I thought it MIGHT go up but was hard to call. The proposals don’t look too bad to me but without any more details it’s impossible to tell for sure but the market certainly seems to have made its mind up!

Well, it's certainly being hammered so far. It's almost tempting at the price...

HC - Hasn't Corz already filed for bankruptcy? That what the article suggests to me and it is also consistent with the Coindesk article which predicted that it would.

The question now is will it emerge successfully from (Chapter 11) bankruptcy or it will and end up 'properly' bankrupt (Chapter 7). It looks like there is life in Corz yet and although the existing shareholders are going to be diluted under the plan it is not clear by how much and whether they will end up in a better position or not if they do emerge successfully (compared to where they are now).

It will be interesting to see how the sp does today - personally I think it may actually go up as it seems to have averted near-term (proper) bankruptcy - but it's very hard to call.

Elvis - I must admit I don’t agree with your reasoning as to what is going to happen or, in some places, even follow it. I still think it is very possible there is a straightforward D4E and we get left with anything between nothing and 50%.

But you could well be right and there are many other possibilities too but one thing I do agree with you on is that a double digit sp is a reasonable expectation so long as we retain the equivalent of at least 5% of the company - whatever route it takes to get there.

Obviously if it’s much more than 5% then all the merrier though I think we are a long way from finding out so I suspect we will hold around the current level of sp for some time.

CLSK did have low energy costs but from what I can see the mining (power) costs per BTC mined went up to around $13k in the last reported quarter (from around $10k in the previous one) despite there being no increase in difficulty. So they didn’t escape the higher prices of electricity in the summer through their PPAs. Since then prices should have come back down but average difficultly this quarter is already up by over 20% so unit power costs would have had to come down at least that much to prevent a further rise.

So they may be feeling the pinch given their strategy with cash costs per BTC mined now possibly over $20k and variable mining costs perhaps too close for comfort to mining revenue.

Elvis - that's a very interesting link you posted but if I am reading it correctly I'm not sure it helps us in the way that you are suggesting since for the special bankruptcy exemption to apply to Net Operating Losses then 50% of the business doesn't have to be retained just by existing shareholders but by "shareholders AND qualified creditors" of the Loss Corporation (as determined prior to bankruptcy restructuring).

My reading is that most of the existing lenders would be included as 'qualified creditors' and so any D4E involving them wouldn't count as a transfer of ownership, whatever the percentage so long as we PLUS them owned more than 50% afterwards. So we could be left with 100%, 50% or 5% and the company would still be able to carry forward all its losses for relief against future profits.

HC - the close was 2.5p as by definition it is set by the UT which was this level. However, this price was not available to retail and was lower than the price trading into close so I agree it is not a good base against which to judge today’s price which seems pretty flat if anything.

HNS - for clarity, if Avatar had bombed then I think that would have been bad news for the Ch 11. Conversely if it had significantly outperformed expectations then that would have been good news. Clearly, neither of those has happened.

Similarly if films significantly outperform or underperform CINE's own forecasts in the first part of next year that may make a difference to how we come out of Ch11.

I'm not saying the film slate is bad or that it is not important. I am saying I think it is very promising but has already played its part (unless actual performance differs very much from expectations).

My point is that the slate is (largely) known, so is baked in and has already played its part - and I would have thought a good one at that. Now we just have to see what comes out of the Chapter 11 as I think it is a given that there is confidence in cinema's, and CINE's future in particular, as the Ch 11 probably wouldn't have gotten this far if there wasn't.