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"My basic premise is if the raw value of the entire asset is more than the debt - then surely it shouldn’t go bust if it can find someone to invest."
Not necessarily,
1. Liabilities are always correct on the balance sheet, but asset, you'll always have to vet. Its a too broad subject to get into right now but just take my word for it.
2. If the business is loss-making, over time, the assets will decrease as the losses will eat the assets
the best way to look at a business is to look at its money making capacity and its ability to maintain or improve that capacity.
@ Bulls
In 2019 - i wouldve definitly bought Cineworld for anything below 5 or 6 times EBITDA (EBITDA as actual operational result, not the disjunct IFRS definition) and i wouldve sold it at 7-9x that amount
As a buyer you would always look to push down that 737 and the multiple - to hedge against decline or whatever
As a seller obviously you would try to maintain or add a growth multilple with the normal multiple - ie 737 x 7 + annual growth of x %
In the current context - Cineworld has all the less concrete factors against them so the sellers are really not in a position to push anything.
If i had the money today i'ld be lowballing as much as i could but i would defo still pay a multiple on 737 but i have 0 knowledge or experience as to how Heavy the buyers will push the price down.
All i can say with a certain amount of confidence is 737 times 5 or 7 would be appropriate in the normal conditions in 2019.
If you look at the cineplex claim - they use a multilple of 9 years + adjustments (which in terms of multipliers imo is a bit farfetched)
For me - my basis to value cineworld in 2019 would be this (all numbers taken from FS19):
Reported Net cash flows from operating activities: 1.293,7 m
Adjusted for
ADJ - Alignment to include leasing flow in operations: (613,3)
ADJ - Elimination of Working capital impacts: 57,3
in total of 737m, which imo gives a fair representation of true operational flow of the business.
Than you multiple it and adjust for whatever risk-factors you wanna use and you come to a certain value / shares
You are right to point it out Wolf, what i ment with EBITDA was operational cashflow in its normal form (not the IFRS illogic way that reclasses rent/leases as finance, and its excluded from EBITDA)
Basicly you wanna look how much a business makes on its own.
So, from what i read, i wonder the following:
1) "debt holders had submitted ... term sheet of a debt-for-equity exchange and a “significant” rights offering to fund the business going forward. "
Possible D4E and rights offering. => Very likely that were going for dillution and not a wipeout?
2) "Our lenders are effectively a bidder and if they become a stalking horse for third parties, we would welcome that."
What would this mean? in terms of Current Shareholders?
3) "This will be yet another instance where the lenders will finance the company and finance its recovery. "
ie New funding - but this time via 2 points raised in (1)
4) "If the lenders become the owners of the company, which is our base case, ..."
again confirming d4e
I guess the million dollar question is gonna be - how much a dillution are we gonna swallow
Has anyone heard of d4e that wipes out existince holders?
Hopefully this whole "saleprocess" will be the way to get an as high as possible price for the Lenders to match or concede on.
I read somewhere that an offering would be made for 800m on a 4billion valuation - would that mean we're looking at 20% extra shares?
Bulls, that the million dollar question.
In normal circumstances - most acquisition deals are made based on EBITDA or Cash flow multiples.
The first big question is what EBITDA or CF is it doing today or what does the buyer think it will do.
i could write a whole book on this really but if you are looking for a one sentence reply here it is (imo):
Business is worth a multiple from 5-9 times whatever the EBITDA or Cash flow is.
The multiple depends on how "sure" or "secure" the annual income is and the EBITDA is best looked at under normal circumstances or in the length/expected growth on the years that follow.
Whoever is looking at Cineworld now will consider this :
EBITDA under normal circumstances
How feasable it is to get Cineworld back to normal circumstances
How many multilples their willing to pay
Ofc - given the circumstances - any buyer would be in his right to push the price down as there's a lot of uncertainty
If you would buy Coca Cola for example - it would be an easy assessment of current CF and agreeing on a multiple (which would be high - cuz why in the hell would you wanna sell coca cola)
interested parties dont have to be limited to "known companies" i wouldnt be surprised if they reached out to Private investors. Anyone with a brain can see this is a viable business that is struc by the randomness of things.
With the proper financial backing and at the right price - to someone with deep pockets this could be a great opportunity.
Hello fellow boardmembers,
To anyone that is following the docket closely - feel free to post the financials for december (and fy) whenever theyre posted in the docket.
I would very much appreciate it as would many others probably
Thanks in advance
Going Concern Asset Sale would imply what for current holders?
Cheers Hexam, very clear :thumbsup:
Has there been any news (or any guesses) on when we could see/hear how the appeal went?
Has anything been noted in the dockets about the cineplex hearing?
Ah yeah good point. Forgot about the IFRS-reclass. Thanks
Come to think of it, how absurb is it that 100m is intrest or 47% of revenue...
100m loss of which already 100m is interest and 35m depreciations, meaning november was operationally cash flow positive for about 35m or 16ish % of revenue.
Operational cash flows at 15% of revenue are not businesses that deserve to go bust.
And we're not even at pre-pandemic move slate
In one of the other posts , someone listed overall cinema revenues, being 40b + precovid and predictions for 2023 where 30b, so barely 75%.
But lets be honest, for the xxxth time. Our biggest Challenge is the outcome of the Cineplex court case. Movie slate and everything is else are things that are easier to negotiate with a bank or so coordinate/optimize in the inhouse financing/cost-management
Even with 29B, much like spiderman, we're still a long way from home. ( if you look at precovid years with +40b )
btw here is the link so you can see for yourself
https://tickets.kinepolis.be/Booking/TicketSelection?_ga=2.11518071.214632238.1671196546-1679069277.1670162952&_gl=1%2Axrcaj7%2A_ga%2AMTY3OTA2OTI3Ny4xNjcwMTYyOTUy%2A_ga_GPHYB80Z4J%2AMTY3MTE5NjU0NS4yLjAuMTY3MTE5NjU0NS4wLjAuMA..
7 pounds for 2 tickets? What kind of prices are these lol.
Here in Belgium, Kinepolis (the main cinema operator) charges 15 euro per ticket for a 3D screening of Avatar
So 21 pounds for 2 people is definitly within current market range
It seems like ticket prices have skyrocketed cuz i remeber then being below 10 euro pre-covid
Yeah - remember the day very well, and every significant event after that.
My instinct then was that i was overdone, and the feeling is still the same
Its comforting in a way, how some of us LTH as are all in the same trenches
I hope we see the end of this "war" with victory and glory
Happy holidays to all
Fair point Wolf