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I agree with you.
Oh and btw, for anyone concerned about the fact landlords are more inclined to play ball because they cannot requisition their sites from Cinemas to something else, just remember, the end of Cineworld doesn't mean the end of Cinema. It just means the bailiffs sell off what is left and give the keys to someone else whilst Cineworld goes to the history books.
Landlords have a lot more power than people think at this point. The vaccine news gives both Cineworld ammunition and existing creditors ammunition in talks.
Just to add, the Bloomberg loan article doesn't provide much details and doesn't make it seem a certainty at all.
- How much of a loan would Mooky be looking to raise. He suggested an extra $200m earlier but that would only tide them over for another 3 months
- What will be the terms of the loan. How will Cineworld service the loan should Covid-19 run for much more of 2021
- The existing Lender Group is objecting to Cineworld obtaining any new loan that is backed by their assets as they are stating their loans are being backed by those same assets. How will they overcome this.
-Even with the loan, Cineworld will be pursuing the CVA and effectively claiming to be insolvent
Tough times ahead. Let's see what Monday morning brings.
I see Bladey still has nothing but **** to add to this BB
Maybe my posts should be more like yours....let's give this a try....
Cineworld to be 6000p tomorrow.
There. How was that? That's the kind of stuff you rampers like to read isn't it. That's the kind of posts that get recommended.
Sigh.
@bullsbears
It's hard to call. If a loan becomes available, it will of course be good short term news however, It's like putting a plaster on a flowing wound at the moment.
News of extra liquidity is what investors are looking for but it depends on what the terms are. Cineworld are of course looking at many options including this loan, a CVA, possibly even a rights issue or the like etc, anything to solve the immediate liquidity issues.
Liquidity itself means nothing whilst Covid-19 is still a thing. Covid-19 needs to become a thing of the past and fast for Cineworld to survive. Until then it is just a massive debt pile that is crushing Cineworlds prospects of ever returning shareholders hard earned.
There are still lots of questions that remain around the Covid-19 vaccine candidates. No safety data has been reported. No data has been published in journals for peer review. These vaccines are also first of a kind mRNA vaccines, which my wife (an immunologist research) is refusing to take. Without long term studies, her entire research lab wouldn't take an experimental vaccine which works at the DNA/mRNA level. Genetics is not something to be messed with.
The next few months are far from certain.
Overall the loan is favorable news, assuming it happens, because it will allow Cineworld to tick along towards the US cares act date of getting another $200m. The pandemic however, is far from over in decimating Cineworlds liquidity and our profits.
There may be a small uptick on the rumor of this news but crucially as yet nothing has been confirmed, but who knows. Cineworld is going to be volatile for the next few months that's for sure. Risky risky share right now.
I reiterate, only invest what you can afford to lose as the prospect of losing it all are very real and any return to a £1+ SP, should it ever happen are very very far away.
@Papa12345
Why does anyone post on BBs? Most are rampers or derampers. I am guessing you fall into the former with your defensive response to any critical posts to your beloved Cineworld. There are those of us that fit in the middle. That hold stock in a share whilst also acknowledging the inherent risks.
Investors like myself can see both sides of the arguments and are on BBs to discuss and debate in order to learn from each other.
Rather than berate me and try to shut me up with hot air dismissive posts, why don't you try and say something intelligent that either endorses or refutes what I've posted.
So many rampers on here that attack the poster rather than rebutting the content what was posted.
Sigh.
@FunIvestor
Clearly you cannot read a balance sheet. Have you even seen the Interim report? Did you not discern the available liquidity levels?
Of course not, most rampers can't.
Unless oh knowledgeable one, you know better than Cineworlds CFO and the analysts at Fitch/Jeffrey's and S&P, I suggest you share the evidence directly refuting the figures I've shared or reside to live in ignorance.
Either way, personal attacks without substance are nothing but amusing. FunIvestor indeed. Definitely not CluedOnInvestor thats for sure.
@unionpacific
Detailed, measured, analytical rebuttal there mate, with a Mystic Meg prediction thrown in for good measure.
Invaluable insights you have. You sure told me :|
Fitch and Jeffries have it at November/December 2020.
S&P have it at the end of Jan/Feb.
The moral of the story, the current liquidity levels are dire and there is anywhere between 1-3 months of liquidity left only.
Not enough to see Cineworld get any CARES act money, or make it to the first 2021 blockbuster release date.
Further cash has to be raised for Cineworld to survive.
Unless anyone can come up with hard figures rather than pie in the sky "Mooky is not concerned about cash/liquidity", from what I have been able to research, Cineworld will run out of liquidity imminently...
H1 2020 was a shocker and the burn rate, even with sites closed and staff on furlough was about $100m higher than most analysts predicted. This is what prompted Fitch Ratings to downgrade Cineworld again from B- to CCC-.
For the end of H1 2020, Cineworld reported a cash balance of $286 million with $111 available of its $573 million revolving credit facility (RCF) undrawn. That means at the end of June Cineworld had access to $397m.
Access to the $111m from the RCF will end in December 2020 unless they are able to negotiate some sort of extension but with the suggested burn rate, the money will be used up before then.
Cineworld needs liquidity and fast, that is why is is seeking further debt or pursuing the CVA root.
Others here have mentioned Cineworld are due to receive £200m from the US CARES act which is true, however this money is not expected until Q2 2020 at the earliest and does nothing to help Cineworlds immediate liquidity needs.
As outlined by the interim report, the burn rate of Cineworld is high, even with furlough and site closures. Jeffries puts it at $70m a month and estimates that at the end of August that Cineworld had access to $260m ($150 million cash, plus $110 million undrawn revolving credit facility).
By all estimates, Cineworld is due to run out of cash before the US cares act can help. The current burn rate, without extra funding would see Cineworld run out of funds by November/December this year.
With the first Cinema only blockbuster not until April 2021, assuming Covid can be quashed by then, without extra liquidty, Cineworld is in a desperate struggle to survive.
By all counts, they desperately need to find around another $400m which would take them up to May 2021 and they have mere weeks to find it. This amount would see them survive long enough for the US cares ACT money to come into play and potentially for Blockbusters to start playing again, should the Covid-19 vaccines prove successful.
Cineworld is a big gamble right now. Don't invest what you cannot afford to lose folks.
@Bladey
Basic intelligence is knowing that the musings of the average punter on an internet forum board cannot influence the share price of a FTSE share.
Seems you do not have it.
Oh and I got my lower entry last weeks thanks and am happy with it. Not looking to add whatsoever. Happy with my holding, considering the risk/reward ratio.
I was going to write a post earlier to say the same. Shrewd of you to minimize your exposure whilst still have skin in the game for some good profits. I am doing the same.
@Bladey,
I have £30k invested at around 40p average.
The purpose of my post was to outline the risks associated with Cineworld.
£30k is a much smaller investment for me than I have had here in the past and my present investments aside from Cineworld are in far safer stocks in my option, hence the Cineworld punt.
Don't come across as a typically binary ramper/deramper kind of poster. There are those of us that are in the middle and can see both sides. Don't put me into one of your two buckets thanks.
The stock market doesn't entirely run on fundamentals and even dying stocks present great opportunities to make money. If you didn't know that, you have no business being here.
Cineworld is likely to be a volatile, traders stock at this range with the many risks I outlined. This presents an opportunity to make money. What can I say, I'm a swing trader and do pretty well out of it.
@mrzeroh
What do you know about CVAs? Let me enlighten you. It is a voluntary insolvency process. I.e. Cineworld saying, we are unable to pay our debts. As part of the terms to that, they would have to slash costs dramatically. How else would you do that beyond what has already been done than by closing down some sites permanently. It's not rocket science.
Debt waivers are likely to be waived but until the fat lady has sung, it is still speculation.
We have no safety data on any of the vaccines and none of them have release phase 3 results for peer review. We only have press releases from Moderna and Pfizer. So again, the fat lady hasn't sung there either.
Oh and we're all speculators. Unless you think of yourself as Mystic Meg?
The point of the post was to outline risks and I stand by them. Unlike you, I don't see Cineworld through rose tinted glasses. The market has priced Cineworld accordingly, even with 3 promising vaccines potentially available this side of the new year. That is telling in itself.
A lot here think the vaccine is a saving grace for Cineworld, myself included, hence my modest position, but we cannot dismiss the risks when being in such a high risk, high reward stock.
Make no mistake, this is a dangerous stock and there are reasons why it is still some 80% down from pre-pandemic levels and still one of the most heavily shorted stocks on the exchange. Some of these include:
- Cineworld likely to breach debt covenants/not successfully negotiating debt waivers
- Being unable to negotiate further debt funding due to $8 billion + debt
- Potential rights issue with huge dilution
- Cineworld potentially having to close much of it's UK operation permanently to satisfy any CVA
- Further landlords taking Cineworld to court for missed rent payments
- Adverse news around the vaccine candidates
- Theaters remaining close further into 2021, compounding precarious financial position.
- Presently there are no blockbusters to show until March/April 2021. Cineworld is burning through cash and fast. It has already reported a loss of $1.6 billion half year losses for 2020.
- Studios pushing for Universal type deals limiting the theatrical window release and thereby limiting the chains ability to recoup the monster losses of 2020
- More and more movies being pushed to streaming. I for one cannot believe Wonder Woman 2 is headed to PVOD. I never thought it would happen but it has.
etc etc ...
@Tondy
The original movie made upwards of $300 million, with a budget of only $36 million. It was an huge success for the studio.
Was looking forward to seeing this in the theaters. Loved the first one back in the day.
Amazon Studios has today confirmed that it has acquired worldwide rights to keenly anticipated sequel “Coming 2 America” from Paramount Pictures, and has set a March 5, 2021 date to launch on Amazon Prime Video.
https://variety.com/2020/streaming/global/amazon-coming-2-america-eddie-murphy-1234836599/
Side from AEW who has taken Cineworld to court over an outstanding bill of £308k, the Standard is reporting that the owners of Trocadero have initiated legal proceedings and are suing Cineworld for unpaid rent during the Covid-19 pandemic.
https://www.standard.co.uk/news/london/trocadero-picturehouse-cineworld-sue-rent-pandemic-b73278.html
Oxfords Phase 2 trial results were published in the Lancet today.
I suspect Phase 3 results won't be published until December.
A CVA is a positive thing:
No new debt
Reduced debt payments
No dilution for shareholders
Existing leadership stays in power
Cost cutting drive to emerge as a much leaner business
Landlords are likely to be positive to this since their spaces are hard for them to shift to other potential buyers, especially since their sites are large and particularly tailored and modified specifically for cinemas. Also there is an ongoing pandemic situation!
Of course the SP is going up. This is the most favourable way for Cineworld to operate going forward, especially with so many vaccines on the horizon.
Oh and Oxford reported positive news from their phase 2 vaccine trials today in the Lancet suggesting over 65 year olds generate a strong immune response to their vaccine candidate.
I have 73,500 shares in Cineworld bought in 2 tranches costing me £30k. Took my position last Monday at an average of close to 40p
Currently sitting on 18.5% profit, equating to around £5.5k