Chapter 11 is America only. Not the UK business. Spooking to renegotiate rentals in America. Bankruptcy over here is different. Have to be insolvent and directors of a bankrupt company cannot be directors again. So Mooky et al will no longer be on the board. IMO
Chapter 11. Does not mean dilution of stock. Just a vehicle for companies to get protection while readjusting finances. Does not exist in the U.K. hence why company looking at a CVA here, not bankruptcy. This is mainly a threat to get American landlords to drop rent until business back to normal. IMO
Retail investors selling. Traders picking these shares up on the cheap. When a deal comes out and this shoots up. They will be celebrating in the clubs and the retail investors will be scarred for life about trading again. IMO
When they released the RNS about possible dilution to share holders price was at 20p then someone who probably held considerable shares in Cineworld used their contact at the WSJ to release the potential of bankruptcy. This dropping the share price further. Making debt for equity swap impossible. Who would swap 5 billion for 40 million?
These RNS’s were the last part in long running negotiations. With both lenders and landlords. Both side not budging an inch. Probably because lenders and landlords debt levels themselves is vast.
So now we face two options.
Lenders freeze covenants and lend more not expecting payments to begin till 2026.
Landlords to reduce rents in the short term till capacity is back to normal, then rents resume at previous levels.
Option 2. Cineworld goes bankrupt. Taking down more than just them in the process. Landlords losing vital tenants and footfall generators. Beginning billions upon billions of losses to lenders.
Time will tell how this will play out. All I know is the person that leaked to the WSJ did so knowing that it would benefit them themselves in crashing the SP. IMO
No way this can get diluted with the current share price. Lenders know this. Bankruptcy rumours was to force landlords to reduce rents or face the consequences. Lots of people clashing heads. All being stubborn. But cinemas impact on so many other businesses. Hollywood is a massive economic driver for the US economy. This collapsing will cause monumental issues. That is why lenders need to lend more money. Across all businesses that Covid has impacted and look to recover in the long term. Or see debts escalate and the economies collapse around the world. IMO
Haircut. 5 billion debt to 44 million value. They will not even get a penny to the pound. They either lend more and freeze loans till a future date or wipe lose 5 billion. There is no value in the company at the moment. Mooky knows this and is gambling on landlords renegotiating rents and lenders to lend more. He can put up his shares as collateral. Any other deal just does not work, maths wise. It is either lend more or bankruptcy. Which then impacts other cinema chains, as studios less keen for big movies to come out on fewer cinemas. Shopping malls and leisure parks which will lose footfall. Businesses in places near cinemas, which lose footfall. Cineworld touches upon so many businesses. It goes, so do a hell lot of others. 5 billion spirals up to over two hundred billion. Banks know this. They have there maths geeks look at worst case scenarios and their exposure. Final figures would give any accountant nightmares…IMO
Debt holders transfer money owed to shares but as priced at only 4pm a share, cannot suddenly say they are worth £1 a share. 5 billion owed would mean the need for billions upon billions of shares. Company only worth £44 million. Cannot adjust this to suit them. Hence why this kind of deal is a non starter.
Massive issue with new shares is they need over billions of new shares and who in the hell will buy them. Are lenders seriously going to give up money owed for worthless shares. Same with bond holders. That is what Mooky is gambling on. The person who leaked bankruptcy to the WSJ knew that crashing the SP would make dilution an impossible task. Until the share price is considerably higher. Issuing of new shares is pointless…IMO
Issue with sites sell off. Is they rent and do not own. Also AMC would maybe want only a handful of sites. None which would impact on their own theatres and at greatly reduced rent terms, which the landlords will not accept. So all Cineworld’s main locations, US and UK will be mothballed. Then surrounding businesses will fail, due to reduced footfall and ultimately landlords go bust. I am sure all parties involved have delved into the every aspect of this and found their is no solution which does not see any of the debt paid. The lenders may have to take Mooky’s family shares as collateral for fresh loans. And hold out for long term recovery. Thus keep the debt owed to them on their profit book, rather than shift it on to the loss sheet. As I said any solution would have been done ages ago. Someone has hit the nuke button. To push whatever deal they are trying to get through. IMO
Issue is the share price is to low to make dilution a possibility. Need so many new shares, these will never rise or be bought. If this goes bust. It will go bust and never return. Lenders and bond holders have no hope of recovering money in the short to medium term. Only chance is for this to continue and lend it more money to see if with a good slate of movies, income improves. There is no easy choices. Hence why lenders have not stepped in. Any movement to take on the company and they can kiss goodbye to the five billion. Mooky is gambling on this to let him continue running the company, and forcing through rent reductions and new financial loans to see them through. Time will tell..IMO
Polaris sold almost half their stake last week. Wonder if they bought in Friday or today. Increased their holding to team up with Jangho and take control away from Mooky. Speak to the lenders about a leveraged buyout to then sell it on to a potential buyer. Lender might go for this, as it takes control away from the Greidinger family. IMO
Creditors probably get one cent to the dollar. Zero assets. All debt. Hence why lenders are not happy. If they could take it over and get anything like 40 cents on a dollar, they would have already. They have over leveraged. Also factor is they have lent studios far more. Cineworld goes bust, then all films shelved till next year. Dark times for movie industry and banks that have lent to any company involved. IMO
No value in the company. If they take it over they lose 5 billion. They need to lend more and freeze their loans for at least two years. They know this and are not happy. Zero value in the firm in any way, shape or form. Next few weeks will be lots of things discussed. IMO
They sold. Probably investors got cold feet.
Studios need cinemas. No cinemas, no blockbuster movies. Massive job losses. Cineworld is the first domino that goes, far more will fall In its wake..IMO
AMC massively down pre-market. The whole industry will pressure the lenders of Cineworld to do a deal and lent more money. Or watch the whole film industry crash and burn. IMO
They have no choice when their clients want to get out. They can advise them to hold fast. But if their clients want to lose money. They have to sell. Michael Berry had the same thing when he shorted the American housing market.
If this was history. Why have none of the big firms sold out and run for the hills. Whoever leaked the potential bankruptcy strategy, did so knowing it would drop the SP like a stone and leave no room for manoeuvre for lenders and bond holders. Cannot issue any new shares as price so low, would need to issue over ten billion. Bond holders cannot takeover as would just see their money evaporate. Lenders have to lend more money and freeze any repayments till 2026. Cineworld is not like Thomas cook. In fact it is so linked into both the leisure parks and shopping malls they operate in. But also the studios and companies that supply the food and beverages to them. Cineworld is the first domino in a large field of dominoes. Ending up at the very lenders whom lent them the money. They go, a hell of a lot of other companies go with them. Hence why a deal will be thrashed out in the coming weeks. ignore all the scare mongers on here. Most are paid to post or linked to firms that’s have a vested interest in people selling their shares cheaply . IMO
They will get Les than one cent to the dollar. Not 50/60. They would have done this already if they could t 60 cents to the dollar. Mooky knows the lenders are tied in. Lenders not happy about this. Want to reduce Mooky’s control and save face. Will lend more money to be paid back in 2026. IMO
Limited to number of shares issued. Also have to sell these. That is the issue. No point creating billions of new shares and no one buying them for good reason. Hence the lenders with have to lend more and take shares off Mooky as collateral..only way. No one is going to buy worthless shares and Mooky and the lenders know this..