Member Info for Hexam

"Wonder what they are going to put in the results on 22nd?"

I can't see that there would or could be anything in the results in the 22nd that isn't already disclosed in the Ch11 proceedings.

Jamesy - My assumption is that the 'net profit' will be based simply on the difference between the BTC price and the direct costs used (basically electricity) and so in effect equivalent to the mining profit reported by ARB. This would mean (assuming the machines were similar productivity wise) to around 5% BTC mined currently.

This would then need to cover any additional overheads to ARB of running the machines and 5% BTC may not be enough so could be a loss to ARB overall. So I'm not sure your statement is valid except of course that ARB haven't had to pay for the machines - so in that sense they would definitely be losing more if they mined themselves.

If the 'net profit' includes a share of overheads already then the share retained by ARB would be less and so a loss would be more likely (as it would still have the same overheads to meet). This would be an odd way of doing it in my view though.

You're right though we haven't been given much detail so who knows, it could be something completely different, but what we can be sure of is that at the current BTC prices and electricity costs that neither party is likely to benefit much if it does benefit them at all. Hopefully both prices and costs improve soon though so both parties can enjoy meaningful benefits from the arrangement.

“So you also know how much the 25% proffit from the hosting will be? And btc price at time of sale?”

That’s the future - could be anything. You were talking in present tense and they (like other miners) are losing money hand over fist right now.

If the hosting was in place now the contribution wouldn’t make much of a dent in the losses - if at all.

Yes - the accounts and the monthly updates.

Correct Dilly - just the buys AND sells in the closing auction.

“Yet we are here expanding , still making proffit”

Expanding yes. Still making profit? Do you seriously believe that?

"why would creditors right off 5 billion ish to get 90 precent of a company worth 1 to 5 billion."

Because they wouldn't write off all the $5bn and they couldn't 'get the whole company for a couple of billion another way (that's the D2E option effectively).

Fair point though it's not definite - it's just that personally I can't read it any other way.

Also turning it around, if what you are saying is the case then why is the sp anywhere near 3p? If there was a good chance they could come out of this successfully without any dilution then the sp should be much closer to the 20p it was before the first 'warning RNS' came out...

Jeff - just to be clear I'm not saying this dilution is catastrophic it is simply the price for being rescued. I actually averaged down a bit more today as I believe there is upside in this share so long as any dilution is not too severe. There are also good short-term trading opportunities. It all comes with huge dollops of risk though.

Hi jefff - I don't think they need to keep repeating this. They said in the two previous RNS that there would be 'very significant dilution' as part of any deleveraging transaction and the £785m of emergency financing is I believe the beginning of that process.

Poor - where have I said there will be no dilution. I'm saying there will be. The 14billion was just an example - I don't know how much.

You just can't seem to grasp that a D2E is NOT an equity raise. It's handing out shares in return for debt reduction and it doesn't matter what the current mcap is.

"Except it will not fold as now has 784 million fro the DIP"

But it would have folded if it had not gotten the £784m and they got that as a precursor for D2E not as a charitable donation.

They have over $1.5bn of property they own. If you're saying they would only get a fraction of this then it strengthens the case for D2E.

"Someone explain how not only at these levels of Sp can a debt for equity be a good thing for creditors. But also with the regulations set in stone about the number of shares a company can issue."

First part. If they don't do a D2E the business will most likely fold and they'll get whatever they can from a sale of the assets. Maybe $1bn if they're lucky. If they all gave up all of their debt and took 90% of a revitalised and debt-free business this would be worth comfortably more than a $1bn -maybe more than $5bn?

Second bit may apply to an equity raise but this is a different ball game altogether.

"the difference of opinion is the debt VS valuation but if you accept which has been discussed previously, the current market cap/sp is not correct in the sense as it’s not what’s actually going to determine an Equity raise price. It’s pretty must just a stopgap till things sorted"

this is the crux but once again this is NOT an equity raise so no 'equity raise price'.

The mcap is £40m. No point or possibility of raising equity on this. But this share value reflects threat of bankruptcy and dilution.

The lenders will value the business ignoring this and effectively saying what is the business worth if we help put it back on its feet and with less debt? $2bn? $4bn? Whatever the number, it will be much, much bigger than $40m.

In return for putting it back on its feet, and foregoing some debt, they will want a cut of that value. 50%? 90%? We'll just have to wait and see.

*apologies - it was @bullsbears that came up with the effective $2bn valuation.

You may be right and the dilution may be much less than 90%. Personally I think that's better than we can hope for but will be very happy to be wrong :)

Wolf - It was traded on about 10-15 I think but that may be a bit optimistic now. But yes, I don't think $4bn is an unreasonable as a ball park number but it's all guesswork. By a different route @jefff effectively came up with $2bn.

Beastly - I'm saying everybody has their shareholding diluted by 90% in that example. In other words the mcap is about $2bn (using @jefff's numbers) but instead of there being 1.4bn shares there are 14bn shares (using 90% dilution). We obviously don't know the value the business post Ch11 though or the % dilution. That's in essence the gamble (plus the appeal impact).

@bullsbear - The bit you've missed out I'm afraid is the dilution. Otherwise I agree with much of what you said.

But we know CINE did not have any money left and they need $785m of additional support from the lenders just to stay afloat for the next 10 months based on their own projections. That support will come at a cost (and more than just 20% interest).

If as part of the deal they take 90% of the company for example then your 135p becomes 13.5p And that's before the court case - and also why the sp is where it is now I'm afraid.

@bullbears - it’s straightforward to do a ‘fag packet calculation’ - just a reasonable multiple of the sort of earnings pre-covid. These were about $400-$500m excluding interest so maybe $3-$5bn? Very simplified though and lots of uncertainty so huge margin of error!

“Jangho have now sold out completely. So nothing holding this back now.“.

Are you actually being serious? There’s a long list of things holding the sp back. I could itemise them but they’re pretty obvious and I’d just get accused of de-ramping.

Jangho selling isn’t the only problem CINE have got at the moment!

"creditors are pushing for lower valuation
But there actions are doing complety the opposite?"

Jeff - The actions by the lenders to increase financing means that CINE has much more chance of surviving so in that sense you are correct (but if they didn't most of them would probably get next to nothing).

The pushing for a low valuation is AFTER that bankruptcy risk has been removed and this will be based on estimates of future cash flows. The lenders will be more bearish on these in order to get the best terms possible for them.

"If the current creditors were looking for equity could they have just refused the further funding and taken CW over anyway."

Jeff - I would argue that D4E is pretty much that anyway but in an organised and much more practical way. If they just refused future lending and the company just defaulted on its payments then surely the company would just end up in administration and they'd be fighting over existing assets which, as I think most people on here would agree, are worth a lot less than CINE would be as an ongoing business. So them making additional finance available means there is more chance of a D4E than the less appealing option of full bankruptcy.