Member Info for Hexam

"the mall and retail park won’t let it go under" - it's not up to them! And the government won't step in for a cinema chain.

FP - It's tricky this month as we don't know when the duff machines were turned off in July or how much curtailment there was. The extra 13% machines will only have been productive for around half-a-month on average but if the ditched machines contributed nothing in July then it could be closer to your number (or even more) especially if there was any significant reduction in curtailment.

Good, realistic summary Wellington.

"Any chance we could be pushing towards 300 coins in August?"

Sorry - no (assuming they haven't suddenly got a mega-uplift from immersion). If they get to around 260 I think that would show good progress, but approaching 250 may be more likely.

"Financial information that again should have been RNS'd instead of finding out months later"

Seriously? It was in the accounts - published months ago. Should they RNS all of their $3bn or so of annual expenses?

(for info it's not capex)

Who said 50% Wolf? That is indeed wishful thinking but I don't recall anybody suggesting it (I did mention a 50% but that was for a possible discount and even then was just used as an example).

“Just ignore him“.

I do try Cloudy but it is hard with the nonsense he writes. Unfortunately I’m invested in CPI too. Thankfully he hasn’t shown up yet on any other share I’m invested in so small blessings.

HNS - Don’t disagree with your conclusion that they are making a small loss so the gap isn’t that big. But it is not enough to turn a profit, they also have to meet all their obligations and this they have not done this.

They failed the RCF covenant - CINE already confirmed this and they were seeking a waiver. If they had got that then just maybe they would have been ok if they could have also got through the lean months up to Black Panther and found a way of dealing with the court case.

But they didn’t get the waiver (they promised they would tell us when they did). So a tipping point has now been reached and even though the ‘gap’ may not be that large much depends now on how hard-ball the lenders want to be to secure their interests.

Yes Fun, that’s exactly what is implied by Calamari’s example. They hold 99% of the equity as they got around 10 times the shares for around a tenth of the price.

It would have been better at 20p but we are where we are.

Put another way, with your example and Calamari’s additional assumption the current sp makes sense (just divide your answer by 10).

The thing is that will are all guessing (apart from the more extreme rampers and derampers who are just pushing an agenda to give people false hope or scare them respectively).

“If it goes into any form of insolvency shareholders are wiped out. It’s that simple”.

Yes, but Chapter 11 is not a form of insolvency. It’s that simple. It’s a process to try to stop it from going insolvent. The shareholders may still be left with nothing or next to nothing (even if it succeeds) but that’s not guaranteed.

Fun - Agree with everything you say but the additional unknown is the price at which the lenders (in your example) take 90% of the shares. If it is at the same price as existing shareholders then yes it is similar to what you describe.

If it is much cheaper (as Calamari was suggesting earlier - around 90% so he thinks) then it will be much worse (a further 90% hit). We just don't know - but my guess FWIW is that it will be somewhere in between.

Thanks Tegop but although that's what the article said it is at odds from what I've been reading. This is from one of explanations links of Chapter 11 previously posted:

"Immediately upon the filing of a bankruptcy petition, a moratorium or “automatic stay” stays all litigation and prevents the enforcement of judgements and of security without leave of the court. This includes staying the continuation of any existing actions that were commenced before the filing"

So stays rather than stops forever...

"If they go into Chapter 11 the Cineplex case/fine etc disappears."

Does it disappear or is it just on hold whilst they are under Chapter 11 protection? From what I've read it's the latter but if anybody could reference anything definitive that is forever then that would be useful (and welcome).

Thanks Calamari - I agree that any D4E (or whatever deal is done) is likely to favour creditors much more - though we don't know how by much. I just get tired of people mangling the maths.

A 50% discount would still only bring the price down to around 2p, not the 0.4p being mentioned. Many placings are close to existing sp (agree that this one very unlikely to be). Right Issues are at a discount but that is a really a marketing trick as what the buyers gain in the discount they lose in value of their existing shares and I can't really see an RI as an option anyway. A placing is possible but D4E much more likely in my view.

If the (effective) discount is 90%+ then yes the sp (based on current 4p) will be much closer to the 0.4p mentioned.

Wellington - All I was trying to do was explain the theory (or maths if you like) which is often misunderstood.

Put simply the share price immediately after any raise should always be between the price the new shares are sold at and and the price of the existing shares - by simple weighted averaging (and because if not no raise could ever hope to get off the ground)! What happens after that is all down to sentiment and how well the company uses the additional funds.

Very significantly diluted means the number of new shares will greatly outweigh the number of existing shares. It implies nothing about the price.

Calamari - I'm not saying there will be an issue at the current price at all. I'm just explaining how dilution works not what the situation on this share will be. That will depend on the terms and only then can we estimate what the impact will be. Assuming though that the new shares greatly outnumber the existing shares (which is very likely) then all I am saying is that the sp after dilution should (as it also depends on sentiment) be close to whatever those new shares are priced at - be they 0.4p, 1p, 4p or whatever.

No. If there is large share issue at the then current price then the sp would be expected to stay close to that price (if not then the new shareholders would be losing out every bit as much as the existing ones as they'd be 'buying' shares that instantly drop dramatically in value). That would be a bit silly of them and if that's how it worked then that wouldn't be part of it. But it doesn't work like that.

What you said is not right either Wolf. The % of the company you own is less (by definition of what dilution means) but what that reduced share is worth depends on the terms of the arrangement and sentiment. If the new shares are issued with what is effectively a heavy discount then what you suggest is more likely i.e. the value will fall more in line with how much the ownership is reduced.

However, if the new shares are issued close to the existing sp at the time then the value shouldn’t fall that much at all (it will depend more on sentiment).

We just don’t know what terms any dilution will take place on.