RE: Sp falling but not selling4 Jul 2022 20:04
Ocean, global markets are beaten, this includes Boohoo holders like yourself, which has seen 86% of its market cap disappear (413p to 56p). Make no mistake the struggling share price Cineworld battles is by no means exclusive.
Debt for Equity is an often regurgitated FUD claim, but widely accepted as a defunct one. This is well established. It has been stated before. Current net debt (pre-IRFS 16) stands at $5bn (this excludes future lease liabilities) as opposed to the often $8bn (post-IRFS 16) that is usually touted by the press or Motley Fool article you see each week.
The current debt makeup has 68% of it formed from the acquisition from the 2018 Regal takeover ($3.4bn). This was pre Covid. Read that again. ~70% of the debt that hangs over Cineworld was there pre-Covid and pre-Cineplex arbitration.
Some will argue about a potential fire sale and the means of liquidating of assets like property - well the said property is in fact non-existent. Cineworld completed the sale of its 35 owned venues acquired through Regal back in 2019 and then leased it back “in line with our leasehold operating model” as Mooky was quoted. Mooky has a very good relationship with EPR Properties the principal landlord for Cineworld in the US btw.
With a current market cap of £280m, Cineworlds only tangible assets are popcorn machines, laser projectors and some signage. The rest of their value is derived from their business model which, pre covid was profitable every year. So in summary, let the threats of liquidation, debt for equity come. They won’t even touch the sides and as such are non viable avenues of raising capital. For Cineplex who currently have an unenforceable judgement which is due an appeal hearing in October, have nothing but a worthless piece of paper. This is why Cineplex share price doesn’t reflect a cash injection of $1bn CAD.
The current debt pile is saving Cineworld and will see that lenders with even the slightest sense of business acumen will support Cineworld and stick it through with them, else they get nothing and a large commercial property landlord is left with an empty estate and no rivals like AMC, Cinemark coming to take them any time soon.
Cineworld shareholders can sit back and continue to wait this recovery out. Shorters can continue worrying about getting sufficient stock to close their positions and covering the cost margins for loaning the stock they are dumping each day.
Sign In
Follow the stocks
