Member Info for mountainous

Where are you getting a higher interest rate from the RNS FunInvestor??? There’s reading in between the lines, and then there’s inferring something that had nothing to do with the RNS at all.

In terms of what the original poster of this thread has said, and in addition to FunInvestor’s comments; This is an incremental loan facility. It is there in case they need it. Mooky didn’t just go to the lenders and ask for $200M and got it on the spot. This is an extra drip of money in case it’s required. This may very well be Mooky just anticipating some kind of new restrictions for the winter and wanting to prepare an additional cushion for the company.

To directly quote the RNS: ‘ the Group is now well-positioned to benefit from pent-up customer demand and the exceptionally strong film slate through the second half of 2021. The Group expects to release its 2021 Interim Results on 12 August 2021 where a further update on trading will be provided.’ Right before our eyes, they have told us that the company is in a position to benefit in the near future. We have a good film line-up coming and we’ve just been told that the company is ready to reap the benefits of it, all imo.

To add further, allow me to quote the CEO himself: ‘ we are very excited about the potential of the unprecedented slate of films in the second half of 2021 (mainly in the fourth quarter). We remain confident in the prospects for our business and continue to look forward to welcoming our customers back to the best place to watch a movie’. The guy is confident in the company’s prospects for crying out loud. Go and look at the RNS updates for Q2 and Q3 last year and tell me if he’s using the same language.

You see ‘debt’ and instantly think that imminent disaster is coming for the company. Look at the glass as half full for once.

Some people need to calm down a bit imo. The RNS we saw this morning has both positive and negative connotations with it. Yes, it’s great that lenders trust cineworld and it’s great that cineworld has more financial cushioning, but it also isn’t great that they need that additional cushioning, as it shows that the base case scenario perhaps hasn’t been met.

It may well be the case that cineworld is simply taking the credit facility just to cover themselves. They did say that it would have no big effect on the group, so the credit facility mentioned this morning isn’t even affecting cineworld massively from a debt point of view.

The news is neutral, take it as you will. As some people pointed out this morning, it’s going to take a good amount of attendance and a steady flow of movies before this really starts taking off. I personally think we’ll see a boost after the new Bond movie.

Personally, I’m topping up a bit in the run up to the results. I then hope to look at AMC’s and Cinemark’s earnings (as someone last night mentioned that they’re releasing a week before cineworld’s), and then use them as an indication for how cineworld’s may look. If it looks ok, I will top up more.

All in all, the RNS is simply just a small update. This wasn’t cineworld coming out and saying that they’ve just taken out $600M in debt with a heavy interest rate. As I like to mention, we went through the entire pandemic with no equity financing. The company isn’t in a lot of trouble from my perspective. All imo.

I honestly can foresee this reaching 180p again. For me personally, I have no target exit price. I believe CINE’s fundamentals are solid, so I plan to hold for as long as the company is doing well, and I’m patiently waiting for the dividend to be reinstated.

sorry, I’m not a massive film fanatic, however I’m planning to go and watch a movie sometime next week. I’m not too sure exactly which one yet, but I can for sure tell you I’m going to cineworld :)

my average is currently about 84p

my favourite thing about cineworld is the fact that it is a massive cash cow. The industry is way more essential than most people realise. I think the CEO is a very wise man who has good knowledge of the industry, and I have a lot of faith in my investment because of his expertise. I strongly believe that he’s going to get the company back to its previous condition, perhaps even better. We went through the entire pandemic without any kind of equity financing. That is a massive testament for a company that had its revenue stream shut off for the majority of the year. I continue to buy more shares; I remain very optimistic for the future of the company :)

So Cineworld has quite a lot of debt. Their debt to assets ratio is nearly at 98%.

Lenders have been favourable to cineworld during this time and have met cineworld’s demands (to the best of my knowledge). However, given that the company still isn’t fully out of the water yet, how likely is it that cineworld will have to do a debt to equity swap or any kind of refinancing for that matter? I’d like to think it’s not very likely lol.

Long on Cineworld, love the stock, optimistic for the future, but just wanted to see about this aspect of the business.

Personally, I’m looking forward to them and I plan to top-up before the results. I believe they’ll be positive.

Any thoughts?

Those who are shorted have only shorted CINE by about 0-2%. This is not an AMC situation where the company themselves were saying they were unsure if they were going to make it out alive and the shorts were totally annihilating the stock through naked shorting. I’m convinced AMC was shorted well over 50% at that time.

A previous comment started that experienced hedge funds like AHL are increasing their shorts. That’s all fine and well, but their short is just over 1%. If they were so confident that this company is going to go down, then why not short more? Realistically, if CINE was to actually go bankrupt (which I think is highly unlikely at this time), a 1% short position is literally nothing. If they shorted when the price was 80p and the market cap was around 1.1B, they’re going to get around £10-15M if the company goes bankrupt. That’s peanuts compared to the nearly $18B equity they have (from what I managed to find).

It all just looks like play money to them. If they had a genuine conviction that CINE was going to go bust, then we would see a much higher short position.

400p is not impossible imo, however it is very optimistic indeed.

If something like 400p wasn’t possible, then why did the executives put 380p as the upper cap in their remuneration report? Remember that executives will do their best to get their bonuses, so they wouldn’t put an impossible sp to get high bonuses.

I’ve been in this stock since earlier this year, and it’s definitely had its ups and downs.

My opinion of the results today is that it’s a good sign that the company is taking measured steps to expand, which is a nice thing. Remember they had a nearly neutral cash flow when they announced last time, so it’s not like the company was burning through cash like crazy and still deciding to expand. EVE stated in their annual report (I believe it was the chief chairman) who said that EVE’s recovery stage is nearly done and that the company is ready for expansion (or words to that effect). So I take the results positively, I think the drop is caused by investors who think that EVE is expanding too early and haven’t yet fully recovered.

On a side note, it’s great to see an active forum on this stock! Always great to have a small group of interested and engaged investors to share thoughts to.

BigPlan - ultimately, the debt is large, but it can be managed imo. There are loads of ways to handle it as discussed. The business model of cinemas is here to stay, as we both agree on.

onesharewonder - thank you for your kind comments. Looking back, disintermediating probably isn’t the best choice of words, but I got the message across XD

BigPlan - thank you for your analysis. Here are my comments:

I personally never see movie studios disintermediating and leaving cinemas in the dust. For movie studios, streaming services are not that profitable for them. You stated in your analysis the stark difference between the cost to the consumer. Going to the cinema is a special experience for some, and as long as people are going into the cinema, the cinema will be the biggest profit maker for these movie studios. Movie studios get the bulk cost of the ticket that is sold to consumers, only a small amount goes to cineworld itself. Hence why concessionary products like popcorn and drinks are priced at a high mark up, so they can make their profit. The ads at the beginning also generate a good amount of money for the cinemas. So all in all, there are many ways that the cinema is profitable also.

In terms of rights issuing, many people have stated that a rights issue makes little sense at this current time for the scenario you are proposing. I think it’s safe to assume that CINE doesn’t need a rights issue immediately, and as you stated, the reason why they may need it is to improve the balance sheet. You’re correct there, but why would you do a rights issue when the stock is so low, when you could allow the stock to recover and then get more money from your rights issue. If they allow the stock to rise to circa 114p, they will get double the amount of money from the rights issue than if they did it now. (It doesn’t have to be at 114p specifically, but the point I’m trying to make is that CINE is missing out on a lot of additional money if they do the rights issue now).

Lastly, someone pointed out the remuneration and how that’s linked to the rights issue. From the report, we see that remuneration is contingent upon how how the stock price performs. To do a rights issue, and consequently dilute the stock, would mean that the prices needed for remuneration likely wouldn’t be met. We know that it’s unlikely that the company needs a rights issue right now, so why did the company make their remuneration report based on such prices, if they knew that a rights issue would be necessary in the future? It doesn’t really make sense, unless if I’m missing something.

Dragon9 - yes I think you’re correct there, cineworld did one to finance the Regal acquisition back in 2017 (I believe it was 2017).

Either way, the company still has a way out if it gets really bad, which I can’t see happening now that they’ve made it out of the thick of it. I can only see this happening as a long term solution, which I can see eye-to-eye with

Dragon9 - don’t worry lol, I realised how it sounded after I posted it XD.

Thanks for responding to my question, the response was really helpful :)

So when you talk about the lender’s willingness to lend money, you are talking about shareholders in the sense of an equity raise in the form of a rights issue, correct?

ie, shareholders would have to approve the rights issue.

However, if a shareholder has sufficient funds, what’s the downfall? It’s a bit of a tit for tat; your holding is diluted by the discount kind of makes up for it right?

this last post from this thread was in response to BigPlan

I understand that an equity raise isn’t the most preferential situation, however I don’t see this being so urgent? They made it through the whole pandemic without needing such action.

In terms of the future, I can see this perhaps being needed as you stated, but I think for now we will be totally fine. I think the share price may increase back to about 80-100p by the time that comes, and then cineworld will be able to get more bang for their buck with a rights issue, and plus a rights issue at that price won’t totally degrade the stock to crazy levels.

Would love to hear your view on this, you seem very financially acquainted.

BigPlan - thanks for this info. I just wanted to ask with regard to the equity raise, the only equity raising that could be happening here is the company selling off their own shares. At this current time, they can’t issue more shares as I believe that would require shareholder approval.

So am I right in concluding that the company is simply selling off their own shares in return for cash?

*this is not financial advice.

Just take a sit back and remember what the cinema truly is. Without the cinema, movie studios will be fundamentally and totally changed. Cinemas bring in significantly higher volumes of money for movie studios than streaming platforms do. If this place is in deep deep trouble, then I think the creation of movies as we know it will be completely changed. So CINE, being the world’s second largest cinema chain, is NEEDED!

Let’s talk about CINE’s cash position for a moment. CINE’s cash position was $140.6M going into 2020. Their cash position going into this year was $336.7M. If cineworld could survive the rapid closure of its sites with just that amount of money in its pockets, and not needed to dilute their stock, then why the heck are you worrying now that they had nearly 3x that amount at the beginning of this year and have made it out of the second wave alive. They only shut down 20 sites in the whole of the world throughout 2020. Just 20!!

Cineworld released an RNS a few months ago saying they had good attendance numbers on their openings weekend, that just goes to show that the demand for cinema is still there! I went into a cineworld some weeks back and the place was PACKED! This was a Saturday afternoon. Remember that cineworld was never a fully packed cinema even pre-pandemic. Their attendance figures were not that encouraging to even start with, hence why I think that CINE was the most shorted even pre-pandemic. Despite those kinds of attendance figures, they were still profitable! By the billions!

I think this kind of price movement was initially started by the HF’s who were trying to exit their positions. I think they took it way too far. To those who are saying that it can’t just be price manipulation anymore, you’re completely correct. Remember that cineworld IR told us that the stock’s movement has likely been caused by private investors and by negative sentiment, as the stock on loan has remained relatively constant. I personally think that the HF’s drove this down to a point, but then private investors panicked and now we’re here. To the naked eye, nothing about this company has changed. A really nice point made by another user on this forum earlier was that the volume we have had recently, even for the last month, is completely insufficient for Jangho to have sold their position. Just remember these basic facts :) Yes, the picture doesn’t look rosy right now, but we have some great news ahead of us soon with regard to the capacity increasing and the 12th August coming.

I hope this helps ease your fears a bit, good luck to all :)

Sorry gezza, can you clarify what you mean by BOD?

Thanks for the warning Crumpets :)

JG68 - completely correct that it may be a mix, but either way if this company was about to go bankrupt, Mooky would stand to lose a lot of money if he didn’t sell his shares, right?