Member Info for HNS_77

Britain and Canada are parties to The Foreign Judgments (Reciprocal Enforcement) Act 1933 (FJ(RE)A 1933)

As the title suggests this facilitates the recognition of foreign court judgements in other territories to be enforced and not simply ignored. If this were the case it would undermine trust that parties would ever honour contractual obligations as they could simply disregard them and works both ways - that's why we have a legal system in the first place and why companies like doing business in territories that respect the rule of law

Having said that Cineworld employs over 33,000 people of which 5000 are in the UK and the largest Cinema operator in Israel - anyone who believes politics will not play a role in bringing this to a sensible conclusion must also think they actually had a reindeer parked on their roof on Christmas Eve

After the process of appeal is exhausted and assuming it fails enforcement of the ruling has to come to the UK courts and despite what our CP friends and shareholders believe there are routes to challenging this and it is not an automatic enforcement of the ruling

It’s fortunate that the states with the highest levels of vaccination uptake are those where regal has most of its cinemas eg Florida, California and New York - in news reports Fauci has been very positive about data from the U.K. so they seem to be anticipating a similar experience eg high cases but less death/hospitalisations

@dream machine I don’t expect to see much movement in the SP tomorrow mainly because LSE is back open on Wednesday

@Cantona appreciate the further detail - the figures you provide look reasonable and that Q1 assumptions seems likely to me .

As I have mentioned on here previously I cannot see (even on a failed appeal) how the award to CP could be enforced on the basis of a $1.24bn lump sum purely as that does not conform to expectation damages - CP would not have experienced synergies of 1.24bn in one year - was based on cumulative annual figures and should only be paid as such - on that basis taking account the possible 1-1.5 years to get an outcome plus the additional time required to enforce the foreign judgement through U.K. courts and then drip feeding payment at a rate of say $100m per year - realising the full damages will take many many years imho if they ever actually materialise

@Cantona thanks for clarifying that I hadn’t picked p it was for the Supreme Court - going on the SIB case looks like it is about a year to get a hearing date so yes could be just over a year - certainly isn’t going to be as quick as Some have made out

As an aside by base case is that the appeal fails as a worst case scenario - my wife is a banker and put together dcf model using a 0 revenue growth over 10 years but assuming CW reaches at or near to 2019 box office - on that basis even assuming CW has to pays the synergies award it gets to a share price of 160p - this is about half the assumption of Simply Wall Street as they assume some quite heroic growth assumptions. My take therefore is even with the drag of the court case assuming box office performance continues that sort of price is conceivable in 2022

To try and gauge exactly how long the appeal process is likely to take I found a recent appeal to the Ontario Court of Appeal (funnily enough also against a recent judgement by Judge Barbara) this is the timeline . It is a big case involving a 4.5bn damages claim so comparative to CP vs CW

Case SIB vs TD Bank
Ruling - 8 June 2021
Notice of Appeal - 8 July 2021
Registration of Appeal 14th July 2021
In a website update SIB (the appellant) note that they expect the appeal hearing “ around the middle of 2022” with no timeline provided

I also found that based on average times from hearing to decision is around 4-5 months
If CW follows a similar path that works out to be

Jan 15 2022 Notice of appeal
Jan -Feb 2023 Appeal hearing from you takes place
May - June 2023 - Appeal decision announced

So could be looking at a minimum of 18 months before the appeal decision is known and before any further action before U.K. courts is even considered

CP should probably keep the champagne in the fridge for now

http://www.sibliquidation.com/homepage/sib-appeals-td-decision-to-ontario-court-of-appeal/

https://www.scc-csc.ca/case-dossier/stat/cat5-eng.aspx

Merry Xmas mountainous and to all who continue to contribute thoughtful and positive comments on this board.

Some further legal comment on the case is beginning to filter through -when lawyers describe the damages award as "novel" and "not traditional" sounds like code for "weak decision" to me...

Osler, Hoskin & Harcourt LLP

Notably, the Court based Cineplex’s damages on its “lost synergies”, which is not a traditional basis for damages.
This was a notable finding. Traditionally, the synergies resulting from a transaction have been viewed as benefits that accrue to the buyer, not the seller

McMillan LLP

Given the size of the judgment and the significance of the legal conclusions in Cineplex, it is likely to receive careful attention from the Ontario Court of Appeal in 2022.

Justice Conway awarded Cineplex approximately $1.24 billion in damages, which was mostly in respect of lost synergies that Cineplex anticipated from the deal. This appears to be a novel basis for the Court’s calculation of damages to a target company.

Thanks all, hopefully this can fill Cine holders with that little bit more Christmas cheer

Hopefully this narrative continues to grow and similar headlines appear outside of Canadian media outlets

Another source (Bloomberg CA) covering the story with the quote from Canaccord with some coverage

https://www.bnnbloomberg.ca/cineplex-awarded-1-24b-in-damages-in-abandoned-cineworld-deal-1.1695983

This would explain why CP hasn’t rocketed on the news and gives further hope that the full damages award isn’t likely to materialise

Happy Xmas all

https://thedeepdive.ca/cineplex-canaccord-pegs-chance-of-1-24-billion-in-damages-being-collected-at-25/

@mountainous that is a very interesting observation and what a delightful outcome of that were possible.

After reading your comment I found this article from Marketwatch from 12/2020 where it refers to 1232743 BC Ltd cancelling the acquisition of Cineplex - that would be a plot twist worthy of Hollywood!

https://www.google.com/amp/s/www.marketscreener.com/amp/quote/stock/CINEPLEX-INC-1409439/news/1232743-B-C-Ltd-cancelled-the-acquisition-of-Cineplex-Inc--33836762/

I tested positive for Covid on Monday having just had my booster a few days before. It has been like having a mild cold - felt rough on day 1 and now in day 3 I feel almost back to normal again - perhaps this is on account of me having had 3 jabs - either way I am grateful

As an adult in my early 40s if this is the experience for the vast majority of the population (which I hope it is) then life should be back to normal very soon and no need for lockdowns. I accept this is an n=1 testimony so cannot reflect every persons experience

As soon as I am disease free I will be going to watch Spiderman and Matrix 4 - who knows I might be part of a wave of people who haven't been able to go to the cinema due to isolating so we might see a delayed spike in box office takings

@bluebuxton full article below for what it’s worth I think the argument it makes about putting regal up for sale is pure scaremongering which the times seem to enjoy

Short sellers have lined up more bets against the heavily indebted cinema chain Cineworld than at any time since the height of the pandemic ten months ago, amid concern at the huge damages it has been ordered to pay to Canadian rival Cineplex.

Nearly 16 per cent of Cineworld’s shares are on loan to short sellers, according to IHS Markit. Traders have continued to place bets against the company even after its shares plummeted 39 per cent last Wednesday, when a Canadian court ordered Cineworld to pay £722 million in damages to Cineplex for aborting a takeover last year.

Cineworld plans to appeal the verdict but legal sources suggested it would be difficult to overturn. Pandemic-related contract clauses are typically watertight in Canada, which suffered during the Sars epidemic two decades ago.

If an appeal is unsuccessful, it may be forced to sell or list its US business, which made up around three quarters of its sales prior to the Covid crisis.

Cineworld has been battered by the pandemic and Omicron threatens further disruption just as blockbuster releases such as Spiderman: No Way Home should be boosting sales. Lenders to the company, which which has net borrowings of $4.6 billion (£3.5 billion), called in advisers from FTI Consulting to handle negotiations with Cineworld last year, according to Sky News.

For anyone looking for an easy read/ analysis of the judgement this is a good source

https://www.dlapiper.com/en/canada/insights/publications/2021/12/ontario-court-awards-damages-to-cineplex/

the $1bn synergies is a calculation based on an annual $165m figure so this seems argument enough that in the event it stands post appeal that it is paid as it would have been over years in rather then a massive windfall payment as that was never an outcome for “Cineplex the company

My calculation of Cine is with debt and operating costs interest etc all taken into account there is a figure of about $500m that would usually in part go towards dividends. If a proportion of this is used to pay the a-holes at Cineplex It’s a debt Cine can easily live with as a base worst case

A quick google search is showing news from hospitals reporting covid hospitalisations are 80%-90% unvaccinated- sadly some people will suffer breakthrough infections and or can’t have a vaccine - but it is clearly a worse problem due to some people who can get vaccinated not bothering

anyone familiar with bio tech stocks these types of "investigations" seem to go on all the time - small time ambulance chasing lawyers always looking jump on to something, probably someone thinks they can capitalise on CINEs current predicament by crying foul grabbing some negative headlines in order to collect a relatively small but juicy settlement pay out to go away - quite grubby and pathetic really and not overly concerned at all.

Thanks everyone who has sent it already and mountainous for improving the template - as we know it is a long shot but at least we direct our energies into some meaningful action!

Thanks for following up Newguy it’s a long shot but certainly can’t hurt to alert them of this activity

Just sent this version to the Canadian equivalent inquiries@osc.gov.on.ca

Feel free anyone to amend and send

Dear team

Recently it has emerged a Canadian hedge fund called K2 and Associates based in Toronto Ontario opened a short position against Cineworld PLC trading as CINE on the LSE.

According to records this companies short hit the threshold for declaration on 24th November - 17 trading days before a critical judgement against Cineworld was handed down by Judge Barabara Conway on the 15th of December involving litigation that awarded its opponent Cineplex a Canadian Cinema business over $1bn Canadian in damages

During this time K2 increased its position and culminated in its highest position to 1.77% the on 14th December 1 day before the judgement was announced.

As stated this judgement took place in a Canadian jurisdiction and given the incidental nature , geography and timing of this activity by this actor seems highly suspicious and worthy of further investigation to establish any possible wrong doing

As this impacts a U.K. company listed on the London Stock Exchange I have also sent a similar note to the FCA to investigate my concerns at their end. I hope you look into this matter as it seems very suspicious given K2 had no declared position or dealings with CINE until very recently as this judgement came to light.

Sincerely