Member Info for mountainous

@shazabo, I retain my opinion that in a worst case scenario where they can’t pay it, they’ll transfer the liability to 1232743 BC and then clear their hands of it. Johnson and Johnson have done this sort of thing before when they had huge liabilities because of the talc powder cases.

Alternatively, may it be the case that there are still intentions of Cineworld acquiring Cineplex? Perhaps may they have discussed that Cineworld will buy Cineplex in 2-3 years time when Cineplex is in better shape and Cineworld has sufficient cash to acquire?

@StanleyPro, correct. When we first discussed this, I came up with the idea of doing some sort of tender offer to current shareholders for a slightly elevated price to see if they could do it.

Then again, that may remove the element of keeping it under the radar.

wow @HNS, I actually never knew that.

So the question really is why did CINE renew the registration so recently? In February, it was as clear as night and day that the acquisition was not going ahead, so it is a very good question. Why did CINE renew it if it was just for the acquisition?

If it truly was ‘just for the acquisition’, then why is CINE paying to keep this registration open? Surely it is just cost-efficient to close it since it would no longer be required?

@russtini, good afternoon.

Cineworld has no business in Canada, so if the appeal were to fail it would be Cineworld as the whole entity (Cineworld Group) liable to pay the damages.

However, there is an interesting part of the Arrangement Agreement which states that a new subsidiary called 1232743 BC was created for the purposes of the acquisition of Cineplex.

As a matter of fact, page A-4 of Schedule A of the agreement states that ‘“Purchaser” means 1232743 B.C. Ltd.’ and throughout the document, it is stated that Cineworld Group PLC, 1232743 BC and Cineplex Inc are entering into an agreement.

It has been a contentious point of debate on this board before, but some of us believe that it is possible for Cineworld to place the entire value of the damages for us to pay on this 1232743 BC company, and then leave 1232743 BC as a standalone company. This would remove Cineworld’s liability to pay any damages whatsoever, and 1232743 BC (which is a company with no tangible assets to our understanding) would go bankrupt. This would effectively mean that no damages would go to Cineworld, because 1232743 BC has taken the liability and they would then be bankrupt.

At least that is the way some of us think it would work. Others think it is a complete daydream.

All in my opinion.

Good morning @BlueBuxton, very sorry to hear that.

I hope you get better soon!

I think whether we win or lose, I’m staying here. If we win, then I can say from the bottom of my heart that I genuinely believe CINE will make a return to 180p+.

If we lose, I’ll be down so much that they’ll be no point in selling regardless lol. I’m hoping it’s the former.

Yup, it’s back in 4DX as well! I’m planning on watching it this time, I missed it the first time around and Danosaur has told us that the experience was fantastic!

Good afternoon @TommyD

Yes, it is possible. But it depends how CINE would like to go about it.

I believe that CINE could reach out to Cineplex and say they are interested in acquiring and start the process all over again, but considering the bad blood that exists between us Cineplex, I don’t see it happening. I don’t think the CEO of Cineplex would even allow it to go to a shareholder vote.

Would lenders allow for a fresh round of funding for a repeat of the acquisition when they already funded the first one? I don’t think there is a chance.

There is another way however, and it has been discussed on this board before. CINE could pursue a hostile takeover of Cineplex. Cineplex has a market capitalisation of $709.55m CAD, so to acquire a 51% stake would cost about $355m CAD (about £223m). By acquiring a 51% stake, you would obtain a controlling interest in Cineplex. If CINE are particularly expeditious with it, they could finish the whole thing before Cineplex gets a chance to dilute the stock.

I also had a thought that because CINE owns many companies, they could split the stake amongst them. So for example, Cineworld itself buys 4.99%, Regal buys 4.99%, YES Planet (cineworld subsidiary) buys 4.99%, Picturehouse buys 4.99% and so on and so forth, until we have 51% indirectly. This way, I think that CINE would not need to report any shareholdings to Cineplex, so they could go under the radar and add an element of surprise to it. I don’t think there is anything stopping them from doing that.

@lpd, good point.

I think right now, the investment case for CINE is that they’re in high tide, but if they make it out then it will be the investment of the year. 1. They need to pay off dissenting shareholders, 2. They need to deal with Cineplex and 3. They need a return to 2019 levels for the box office and it needs to be reliable.

I think 3 will come with time, 1 and 2 remains a bit of a mystery though. I have not yet written off my investment and still believe, it’s just the silence from IR which is creating a lot of tension in my view.

Back to reality, for tomorrow I expect more or less of the same. Rise today was great, I would be really happy to see us trade flat tomorrow (even better if we increase further) so we can hold gains from today.

Out of court settlement with Cineplex, and CINE announces new acquisition of Apple, fully financed by CINE’s own cash supply and no need to draw upon lenders or shareholders for funding.

After market close tomorrow, we get another RNS stating the return of dividends, the first being £100/share. Then I book a holiday.

Exactly that @lpd

At this rate, I just want to hear something good, whether if it’s that they’ve paid the 65% for the RCF, or something else.

This silence is just killing investor confidence. Please put the RNS function to good use and keep your investors well informed.

@BlueBuxton lol, reminds me of how Cineplex owns some recreational businesses as well

@silvesy, I’m very much the same way. I didn’t go to the cinema often prior to pandemic but now I have an unlimited card and go when I can.

It is also worth remembering the increase in concessionary spend we saw last year. So compared to pre-pandemic, people are spending more on concessions than before. This is great considering how how the profit margin is on such items. Just one combo deal equals the hourly wage for one worker.

This company has huge profitable potential, the cinema business model has proved watertight in all kinds of economic conditions, and has also proved itself to be quite rigorous when it comes to competition, blu-ray, DVD, on demand never took down the business model, and I expect the exact same to occur with streaming.

So essentially, what CINE have told us is that the test is due on June, but they have until September to report it to the debtors correct?

It is a bit concerning to me that it is getting cut so close. If the waiver was sought and procured then wouldn’t CINE have announced this by now, just like they did with other waivers during the lockdown?

Would be great if CINE could update us! I won’t lie but his silence on this is really awful.

I am all the same, it is all or nothing at this point.

I think this will treat us well, one advantage of having the CEO as the largest shareholder means that the chances of us getting some sort of huge share dilution is lower. If he decides to do it, then he bears the brunt of it the most. That is why the likes of EZJ were doing rights issues to ‘strengthen the balance sheet’ imo, I believe they have done two since COVID?

The state of the market is very poor right now. This 13% drop is quite bad, but when you’re already down 60/70/80% what more have you got to lose really? I’m amongst those people that are just sat here now waiting to see what happens.

I can’t see bankruptcy whilst money is flowing in multitudes as it is now. If CINE comes good and plenty, I will be laughing with joy. The dividend yield at this price will be huge indeed.

It’s all about how much risk you’re willing to take. There are no doubt many in the market who are circumspect towards CINE, but overtime as we deal with all the headwinds I’m optimistic that the opinions will change.

@jane, good morning.

I personally do not think it is a good idea to try and hedge via opening a new Cineplex position. The main reason is that Cineplex has very little to gain from all of this.

If CINE loses the appeal, then either CINE goes bust or they will pursue a new ruling in the UK. If CINE try to pursue in the UK then this becomes extremely high risk for Cineplex. They will need to find a whole new legal team that is UK based. If CINE goes bust, then there is no net benefit for Cineplex either. In response to your question about competition, the answer is no. Cineworld and Cineplex do not operate in the same countries and there is zero overlap. So Cineplex stand to gain nothing from a competitive point of view.

Cineplex can also wave bye-bye to any sort of settlement if CINE goes bust. They will not see a dime. Cineplex is one unsecured creditor amongst many other, secured creditors who are much larger than them. Considering how leveraged CINE is, not even the secured creditors will get back 100% of everything. So what hope does an unsecured creditor have?

All in my opinion.

It could be the case that he is trying to keep it low profile. If he goes around saying great stuff about money coming in etc etc, then it will unnerve investors but Cineplex is watching too.

It could be the case that Mooky is working on increasing the cash position as we speak. I’ve not heard of any new refurbishments or new site openings recently, but before we used to hear of them every other week. That may also be the reason why the interim results have been delayed, as they may show a very large increase in cash position which may scupper our chances with the appeal.