Actually in short - who is/are holding the cards here and how are they devided
Ok i wanna brainstorm with people of knowledge on the matter.
I am a believer of cineworld and in my opinion, in a world of pure logic and common sense i believe in the recovery of it.
The only thing holdin me back is the unknown factor in the current circumstances. I Have no or not enough knowledge how 3rd parties can abuse this scenario against cineworld.
Under the assumption that cineworld is still the viable business that it was, and all stakeholders believing the same, how likely is it. that something or someone else can still blindside us?
Say you are a main stakeholder, how much can they abuse the current situation into forcing something more favorable for them? instead of just prolonging the loans?
in other words, in a logical world of common sense and decency, what is the risk that cineworld may still fail to factors beyond their control (NOT INCLUDING THE CINEPLEX THING)
I really look forward to your imput!
Thanks @ everyone for the constructive comments.
after some reflection i dont think its that plausible - cuz who ever is buying - would possibly be paying a lot and that would also mean that all banks are taking a haircut (as opposed to just give CW another year of delay). And if for the amount paid they gotta cut Mooky in at a % that is intresting for him, it becomes even more expensive for the buying party
Please if anyone wants to pitch in on the scenario, feel free ! very intrested
they would ofcourse be paying back their own debt but that basicly comes down to a haircut of their own cuz the debt would disappear.
wait wait wait - lets draw this out
in order to do this - step is c11. Who "controls" the company then? What are the steps?
I Would expect as soon as an "indepent" party is joining to controle/admin the company, they will sell to the highest bidder. In short - i think they would have to risk serious additional cash to "buy" everything that is up for sale in the c11 and to then still give a share to mooky would be expense.
This paragraph in todays FT worries me a bit. Can anyone with proper knowledge, comment on whether this isnt a conflict of intrest on mooky's part or comment on the plausability of this scenario (be aware FT assumes the scenario in the event of C11)
https://www.ft.com/content/6ccd539f-ff48-46ac-8060-74bd11f07241
"" Once the Chapter 11 filing is complete, Cineworld’s biggest lenders — which include US investment managers Invesco, Eaton Vance and State Street — will almost certainly seize control of the company. The remaining Cineworld shareholders will be wiped out in the bankruptcy process.
Mooky is expected to be given a stake in the restructured company, according to two people with knowledge of the details. ""
is FT using their "look we were right with the first article"-power to now scare or is this new scenario that would basicly be a free pass and quick win for mooky. bit shaken by the news. Rational minds of this board, feel free to lighten the tension please
although it is not hard on facts, a scenario where Mooky saves himself does sound scary. would it not be a conflict of interest thou to screw 70% of his shareholders for a nice piece of the pie in the newco?
last bit
Cineworld said it had “headroom” to cope with its debts provided US admissions — which make up two-thirds of revenues — return to 85 per cent of 2019 levels in 2022. But according to data from Box Office Mojo, which tracks ticket sales, they were only 57 per cent of pre-pandemic levels in the first quarter. At the end of June, Cineworld was due to make a $170mn payment to a group of former Regal shareholders and was expected to make a payment to banks for a revolving credit facility. Both were missed. One short seller, who had been following the stock since last summer, said at this point Cineworld was “so stunningly and obviously bust” he more than doubled his position. A closed Regal cinema and the open AMC Empire 25 cinema in Times Square in New York during the COVID-19 pandemic A closed Regal cinema and the open AMC Empire 25 cinema in Times Square in New York during the COVID-19 pandemic © Richard Levine/Alamy “For the last two years, we’ve heard [from the company] if only they get a James Bond film, if only they get Top Gun,” said Barry Norris, chief executive of Argonaut Capital, who has shorted the stock since the 2018 Regal acquisition. “It’s just all just smoke and mirrors to take away from the fact that the underlying business is just crap and they’ve got too much debt.” Cineworld’s bankruptcy announcement has certainly rattled the wider industry. Last month, Vue, Europe’s biggest privately owned cinema chain, resorted to a debt-for-equity swap to stay afloat. AMC, which has even larger debts than Cineworld, has been boosted in recent years not by strong financials but by becoming a “meme stock”, popular among retail traders. The pandemic did not just temporarily shut down the industry, but it has also sped up its decline, according to industry experts. “The heartland of cinema is young people and they broke the habit and are not returning,” said Alice Enders, a media analyst. “Cineworld won’t be the last cinema to go bust.”
Part 2
During an Israeli court hearing in June over a dispute about local distribution, Mooky said that because of the pandemic “our life’s work collapsed”, according to local media. “I’ve been fighting every day to save what we have built. I hope we succeed but it isn’t certain,” he added. Once the Chapter 11 filing is complete, Cineworld’s biggest lenders — which include US investment managers Invesco, Eaton Vance and State Street — will almost certainly seize control of the company. The remaining Cineworld shareholders will be wiped out in the bankruptcy process. Mooky Greidinger © Rob Latour/Shutterstock Mooky is expected to be given a stake in the restructured company, according to two people with knowledge of the details. The restructuring will also allow Cineworld to renegotiate its $4bn of lease liabilities and reduce the size of its $1bn payout over the cancellation of its 2019 deal to take over Cineplex. Cineworld is still appealing against the case in the Canadian courts, with a final decision due in September. Another option under discussion as part of the restructuring is to sell Cineworld’s eastern European operations to pay back a group of lenders, the people added. Cineworld declined to comment. The law firm Kirkland & Ellis, along with restructuring consultancy AlixPartners and corporate advisory firm PJT Partners, are working on the restructuring. But as Cineworld fights for survival, its executives, investors and industry rivals have been left to think about the wider lessons: did its breakneck expansion prove too risky, or are its problems symptomatic of an industry in terminal decline? “In a normal world, Cineworld would be heroes right now but because of the epidemic they got caught out” by their high levels of debt, said an executive at a rival operator. Cinemas battling to regain pre-pandemic viewers The Greidinger family has been in the cinema business for nearly a century. Mooky and Israel’s grandfather established his first cinema in Haifa in 1930. But Mooky was the first in the family to develop a taste for international expansion. He expanded the company — then called Cinema City — into Hungary in 1997 and subsequently into the UK and the US. A former Cineworld executive said the expansion had worked out “very nicely” until the $2.1bn Cineplex bid which, regardless of the pandemic, was “a bridge too far”. Tim Richards, chief executive of UK cinema chain Vue, had been working on a bid for the 160-site Canadian chain but pulled out. When the Cineworld board met to approve the Cineplex deal, only one of the dozen board members raised any objections. “The final straw that broke the camel’s back was the Cineplex acquisition,” said a person familiar with the discussions. “Nobody was prepared to stand up to them and say this was the wrong deal at the wrong time.” In its full-year results in March, Cineworld said it had “headroom” to cope with its debts provided US admissions — which make up two-thirds of revenues — return
All speculation imo
PART 1
"" When Cineworld, the world’s second-biggest cinema chain, admitted how close it was to collapse earlier this month, its management said that part of the problem was a lack of Hollywood blockbusters to pull in customers.
The company told investors that until the release of Black Panther: Wakanda Forever in November, the “limited film slate” would have a negative effect on admissions and on the liquidity of the debt-saddled business, which has been battered by lockdowns and the exodus of film fans to streaming services.
But while there has been a drought of entertainment on the big screen, an action-packed thriller played out in Cineworld’s boardroom, as its longtime boss ran out of options.
During the coronavirus pandemic, chief executive Mooky Greidinger twice brought Cineworld back from the brink of bankruptcy, persuading his lenders into agreeing a rescue package.
He had built his third-generation family business into a behemoth, riding a wave of easy credit to take control of UK chain Cineworld in 2014 and US-based Regal Cinemas in 2018.
Now, however, his company is nearly $9bn in debt and lease liabilities — brought on by ambitious expansion plans colliding with the pandemic — look dangerously precarious, as ticket sales dragged and a $1bn payout over the botched takeover of Canadian rival Cineplex loomed on the horizon.
At the start of last week, Cineworld confirmed it was planning a Chapter 11 bankruptcy filing in the US and similar proceedings in other markets. The US bankruptcy process is likely to be initiated within weeks, according to two people familiar with the details.
Before the pandemic, its stock traded at above 180p. By the end of this week, it was just under 2p a share.
Column chart of Debt and lease liabilities ($bn) showing The cost of Cineworld’s expansion
A former Cineworld executive told the FT that resorting to bankruptcy would be “a serious emotional blow” to Greidinger, and his brother Israel, who serves as deputy chief executive officer.
“They eat, dream and sleep the cinema business; [Cineworld] was their baby,” he said. But he added that “hubris” had driven them to borrow too much in pursuit of the goal of supplanting US rival AMC as the world’s largest cinema chain. When the pandemic struck, the business unravelled. ""
Link and/or publication date?
Been wondering the same!
btw, im sorry but new to this forum: whats the abbreviation ll en pl ? (limited liabilty and publicly listed?)
* 700 million in operational cash flow*
@eddie
Yes. Cineworld generates (including leases), precovid, a little north of 700 million. you can pay a lot debt and intrests with that
@eddie
Well i phrased it as a question, hoping you would reflect on my answer.
I would never use profit to asses liquidity as it is not the best parameter.
You will find that Operational cash flow and financial cash flow will tell you way more than profit.
I hope if you didnt know this yet, youll at least look into this and learn something from it
Thanks for the good luck btw !
nice move Paul! Was it a panic sale that paid off or did you really wanna get out (if it hadnt dropped further)
@eddie
Why would you use profit to assess the cash-generating vs debt-repayment ability.
Profit already includes intrest paid and also a huge chunk of non-cash items.
Have a look at operational CF (incl leases) and what they already are able to pay in intrests and dividends
That will serve you better in your financial analysis
I would be very intrested to hear the financial analysis that is used a foundation to vote against cineworld.
imo - cineworld, precovid, was significantly cash flow positive. The only 2 liabilities atm are the ramp-up back to business and the overexxagerated cineplay claim.
Anyone with a bit of common sense can see that the 1.2B CAD is beyond proportion, given the revenue and ebitda cineplex generates + the potential saving in synergies.
So again, if there's actual financial analysis against this, i would love to hear/see it