Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
This is clearly going to result in a debt for equity. The question is do the lenders take 100% of the company or do they just heavily dilute us by taking anything up to 99%…
So what are you suggesting will happen then Ian?
A debt for equity will definitely be taking place. People need to get their head out of their arse.
The Times have already reported that this is Cineworld’s aim. Remember, The Times have been spot on pretty much throughout this whole process. They have insiders leaking information to them.
Cambridge - I don’t really see much dramatic deviation from the current share price. If Cineworld gets valued at £500m and we get diluted by 90%, shareholders will hold £50m of the company, which is the current market cap right now.
Cambridge - So you think shareholders will own £4m of Cineworld?
As per the RNS, I think you mean ‘diluted’ instead of ‘nothing’.
Ian - what do you suggest is the alternative to a debt for equity transaction?
£1 million :(
Cineworld, I’m come to the conclusion that you’re a bit of a weirdo. God help you if you’re shorting this. This may well go to zero but there is way more upside potential than downside. The swings can be pretty big.
‘In effect’… They aren’t saying 100% that shareholders will be wiped out at all. I think they are claiming that they will be diluted to next to nothing.
Well so far it’s been bobbing between 4-5p since the bankruptcy protection news was released. I feel it will follow this pattern until more bad/good news get released.
I think it’s very clear now that the sp will bob between 4p and 5p
Cruis - do you have a large position?
I thought the whole point of deleveraging was ‘the quick sale of assets’…
Penta - I do agree. Companies can’t make guarantees or be too overly positive in times like this. That could leave them open to legal matters in the future.
Also when McColls went bust. They suspended shares straight away, and from day 1 they said that shareholders would see ‘little to no value EVEN if a successful outcome is reached’
Wolf - ‘ and there is no guarantee of any recovery for holders of existing equity interests’ could mean one of two things.
1) A total wipeout. Unlikely IMO otherwise shares would have been suspended. RNS reports stated that they don’t expect shares to be suspended during chapter 11 proceedings.
2) No significant recovering in the share price from the current levels, meaning that most people will be sat on losses.
IMO
Antlev - I want Cineworld to do well, just like most people of here. But unfortunately The Times are a very well respected paper in the UK, and so they can’t be ignored. Most of what they said has been bang on. Only thing that I remember being wrong was that Cineworld were apparently looking to go into administration in the UK but obviously this didn’t happen.
Jeff - They will probably do a bit of both. The Times stated that Cineworld are looking to do a D4E on SOME of the debt. So I believe there will be a D4E, where we are left with probably 5-10% of the company, but they may also extend terms on the rest of the loans, and they are probably going to look at severely reducing the Cineplex payment too. Lots of options are going to be looked at.
I agree. But the fact that they haven’t gone into administration in the UK and that shares haven’t been suspended, both of which were being talking about on here constantly, is a good thing for shareholders.
RNS reports have only ever warned of significant dilution, and not of a wipeout. I think if there was going to be a wipeout then shares would need to be suspended.
As you say though Wolf, none of us really know what will happen and we will just have to wait.
‘ The company is trying to agree a debt-for-equity swap with its lenders that would convert some of the debt owed by Cineworld to equity in the company. That, in turn, would “result in very significant dilution of existing equity interests” in the group.’
Very significant dilution. No total wipeout.