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I’m surprised you made it halfway.

“You cannot say a Cineworld with no debt is worth Five billion.”

Why not? I would. In fact if you don’t you are basically saying there is no chance that the lenders will get their $5bn back whatever the scenario. To generate that amount and pay interest in the meantime means by definition that on a DCF basis the business must be worth at least $5bn at that interest rate.

If you arguing that even with no debt the company isn’t worth that amount then you are actually arguing against any solution being found that will totally satisfy the lenders and hence one where we can come out without being decimated - since if they can’t get all their $5bn back they will want to get back as much as possible so leaving little or nothing for us.

So I really hope you are wrong in your valuation for the sake of all of us otherwise we have no hope and you’ve just given the best possible argument for the de-rampers to use.

As to creating disgruntled shareholders I doubt they make up a meaningful percentage of revenue (less than 1% I’d guess) so I can’t see this being a concern at all.

I think you're mistaking a company's worth with mcap and a D4E with a placing or an RI.

ok thx

"Dilution no longer works. HSBC would not want to trade its billion of debt for a share of 30 million. Cannot make Cineworld worth more. They should have taken control when this share was trading at a pound a share."

They wouldn't be trading it for a share of 30m as that's just the mcap in its current distressed state. In the extreme case for example if the lenders wrote of all the debt the company would be worth many times more than £30m by any measure! Obviously it wouldn't be that much but a CINE with less debt is worth more.

Sorry - I wasn't talking about uplift power (i.e. overclocking) but simply the power for running all the immersion tanks.

Quiggers - You read the $170m missed payment due as a fact because the FT and WSJ are respected? So you think CINE lied in their published 2021 accounts when they said:

"On 10 September 2021, the Group announced that it had reached agreement with the dissenting shareholders of Regal Entertainment Group (the “Regal Litigation Parties”) with respect to the payment of judgment of their claim. Under this agreement, the Company paid $170 million of the Judgment to the dissenting shareholders and $92 million was placed into an escrow account to be available to Cineworld as additional liquidity under certain circumstances."

If their accounts are false then they are in even more trouble than I thought (if that's possible).

Cheers FP. Presumably the immersion cooling needs additional power or this tiny in comparison or already included in your figures?

Cruis - that's what I was basically saying. It doesn't matter. What happens with the Chapter 11 of whatever is all that matters at the moment.

Adjusted PBT for H2 2021 was a small loss ($21m). We know box office was a bit better in the first half-of this year so probably revenue up a bit but costs are also likely to be up a bit too.

So maybe around break-even before any one-offs? But really think the key issue is liquidity (or lack of it) and I think any news on earnings will be drowned out by whatever is happening with the current negotiations/actions which we should know quite a bit more on by Sep 22nd.

Hi Wolf - I disagree slightly in that I do believe that there are some clear, possible paths from here in which existing shareholders come out of this better than a lot of people are supposing or insisting.

However, I accept that there are probably more ways that they don’t.

A lot depends on just how bad the current situation is and how much pressure the creditors are exerting which for all the hot air on here we simply don’t know.

In any event that wasn’t really the main point of my post earlier…

"If you at least admitted you called it wrong I'd have some respect"

I for one do admit I called it wrong. I should never have invested in a debt-ridden, unprofitable company with falling ticket sales, rising costs and a whole host of other problems all leading to a questionable chance of survival. It was my decision to invest in IAG though so I have no one else to blame. I'm not doing too well in CINE either but is it so wrong to hope that they can both turn it around?

Hi AB,

I see what you're saying. If they were running at 3EH today, were as efficient as the top miners (130 ETH per BTC is up with the best at the moment) and had a PPA in place now then they could/would be making a profit even with BTC at $21k BTC. That wasn't quite how I was thinking about it but even then I think a couple of your cost assumptions are perhaps too low:

1) I thought PW said they would be using 120mW for the first 3.2EH? This is somewhat higher than your number even allowing for the extra 200PH (though I think he was only talking about Texas anyway). I may have remembered incorrectly but if the power is closer to PW's number then this could push up your costs by over $0.5m. If his estimate allows for overclocking though then would need to add revenue too.

2) I think your wages/other costs are a bit light as they spent $3m a month in Q2 and though this was high due to some temporary costs I don't think $2m with Helios in full flow will be enough.

So I reckon it is more like breakeven possibly?

However, I think the big thing is that it is an artificial situation as they clearly don't have 3EH now and won't do until the mid/end of October. So for me thing missing is difficulty increases. I think this will be at least 20% higher and in fact early next week it is currently expected to go up 10% alone. I think a lot of this is due to much less curtailment as temperatures have dropped but a further 10% increase over the next 6 to 8 weeks is I think the minimum we could expect. This would knock around $1.5m off your monthly revenue number.

Assumptions can be quibbled over but for me it comes down to what I said before. In the absence of a significant BTC rise they need an awful lot to go right (a good PPA, top tier efficiency, completion of installation of bitmain machines, modest difficulty increases) and nothing to go wrong to even get close to making a profit. And that will worsen over time unless they can get more funding for more growth which I think will be tricky.

So I'm far less optimistic on the financials and that's part of the reason I'm looking to exit most of my funds.

Thanks AB - I’ll look at later when I get home.

“A good electricity price negates the need for BTC to rise“

AB - I must admit I can’t get my head around this statement. Even at today’s prices electricity is a fraction of the total cost base (around 25%). Even if the power was free it’s difficult to see how they can mine at less then the current BTC price. As it is I can’t see how efficiency improvements and economies of scale will be enough to make them profitable even with a good PPA.

If you’ve got any calcs that suggest otherwise though then I’d love to see them as I still haven’t pressed the sell button!

“once done and reorganised whether within or outside voluntary chapter 11 the share price would not be at 2. Think logically. Reality is this will be going way north of here.”

I’m afraid the logic is flawed to suppose this will definitely be the case. I would agree that the mcap will rise but whether the sp does depends on the share of the company’s value the existing shareholders retain.

An obvious way of deleveraging is converting debt to equity. Some have said this can’t happen at this mcap but it can for the same argument you use i.e. the mcap will rise sharply with any rescue deal and hence the value to those forgoing debt.

I’m holding in the hope that in any such deal the increase in value will offset the level of dilution but that’s certainly not guaranteed as you seem to be suggesting. It depends on many things including the terms of any swap.

Of course there are many ways this can play out, some not involving a D4E at all - but they could better or worse.

In short nobody knows and it’s all a gamble.

HGN - it was one of several red flags for me yesterday. It did shock me hence the ‘emoji’ although a misplaced bracket made it seem like I was smiling about it - I wasn’t!

One of my biggest concerns about ARB has been their poor efficiency and hopefully immersion will be part of the solution (no pun intended) but the whole thing seems a bit like Goldilocks and her porridge. Too hot they switch them off, too cold they switch them off, too warm and they’re on but with no overclocking.

It’s obviously not as bad as that and I’m sure they will get benefits from immersion - including improving the reliability and extending the life of the machines as well as the overclocking (when the ‘temperature’s just right’). But it just added to the list of things I heard yesterday that changed my outlook unfortunately.

And likewise yourself!

Cheers Krauty

Jamesy - I do see them reaching 3EH this year - but that’s am a lot different to 5.6EH and for me their cost base is just too high for that hashrate unless they also get something out of immersion and cut power costs and a few other things. If their liquidity was better then I’d be more inclined to wait because as you say BTC should turn eventually but I’ve been stung on another share recently by not acting on my concerns soon enough on that front!