Member Info for RS2002

1. AMC say the film slate in the third quarter of 2022 is expected to be relatively weak. They too are not immune to the global box office slowdown.

2. They expect, like Cineworld, that Q4 will pickup

3. Thanks to Meme fever, they have $1bn liquidity thanks to Wallstreet Bets and the “Apes”

Will lenders be sympathetic to the same challenges in box office admissions, Cineworld will face in Q3 when it is one out of their control? Will they agree Q4 will pickup and afford more leverage? Will they continue to push for debt for equity?

We don’t know and it is very difficult to call.

Source: https://investor.amctheatres.com/newsroom/news-details/2022/AMC-Entertainment-Holdings-Inc.-Comments-on-Cineworld-Public-Statement/default.aspx

Do you really believe, as the second largest cinema chain in the world, this would be a good approach?
For Cineworld to re-negotiate with property landlords that they would need to defer rent, put 40-50,000 staff on unpaid leave, harm business relations with studios (who may have a reduced slate of movies for the remaining quarter), to refund the hundreds of thousands of UNLIMITED members for a void period?

If the answer is yes, you need to consider your investment here.

I have spoken to managers at Cineworld who have told me they were awarded shares at 300p and they don’t fret. Consider those who were invested in Cineworld pre-pandemic including funds. I averaged down as did most investors I am sure. The noise we saw yesterday was from the day trading brigade.

Right now, options are still being considered and I hopeful legal arbitration between Cineworld and Cineplex is drawing to a conclusion behind closed doors. Both parties have it in their interests to work this out rather than waste money on legal fees and potentially end up with zero.

The RNS states that it will continue to meet its ongoing business counterparty obligations.

I do agree it is odd that Everyman and AMC reported encouraging admission and concession take for the summer movies, why did Cineworld suggest it did not?

Let us see, tomorrow.

Good night, all.

1. Initial debt maturity is not until June 2023
2. Principal US landlord is all paid up
3. A poison pill and defeated share price weakens the benefit of a rights issue/dilution
4. The acquisition of the Cineplex judgement (not enforced) pre-appeal has had its likelihood of success further depreciated
5. I am a LTH trying to push hopium to a defeated LTH community when in fact the company could be looking at a serious debt for equity trade off to introduce stability ahead of the appeal date

Any one could be true.

One could argue what the proximity is between immediate and near term?

Right now, ERP Properties are saying, Cineworld’s US arm is paid up.

Time will tell.

Has Mooky and Cineworld played the market or is there a significant dilution event coming?

I know FOMO is a terrible thing and Cineworld IMO is one that invites it.

Today, principal landlord for Regal (US cinemas of Cineworld) announced to their shareholders that they were aware of the Cineworld RNS.

On August 17, 2022, Cineworld Group plc (“Cineworld”), the parent entity of entities that lease EPR Properties' Regal theatres, provided an update regarding its current trading, liquidity position and capital structure wherein Cineworld disclosed that it is “evaluating various strategic options to both obtain additional liquidity and potentially restructure its balance sheet through a comprehensive deleveraging transaction.” EPR Properties intends to have discussions with investors, analysts and securities advisers in which it may disclose the following information which has not been previously disclosed by EPR Properties:

• Regal is current on all payments due to EPR Properties as of the filing hereof.

• EPR Properties is not in current negotiations with Regal or Cineworld regarding their obligations to EPR Properties.

So this confirms that:

a) Cineworld does not have an immediate liquidity crisis
b) Has indeed briefed the market and set expectations for their next quarter expecting to be quiet until Q4 when the slate picks up

This does not however answer what options are going to be agreed upon. There still remains the risk of debt for equity and dilution but those who have accepted the risks of investing and that Cineworld is a recovery play, will need to wait until 22nd September for Q2 results.

What I am hopeful about is that the principal landlord in the US (75% of cinemas) has commented they are aware of Cineworld’s hardship, will this invoke conversations or afford additional negotiations? Will this also push for Cineplex’s legal team to consider an out of court settlement as well?

Time will tell.

I remain invested, well aware of the risks.

Good luck to you all.

Cineplex will likely lose money through the pursuit of the unenforceable judgement. Legal fees will be higher when they are potentially looking at a $0 recovery.

Many investors looked at their nearest competitors. Everyman, AMC who reported encouraging recovery for Q2 with Everyman reporting profit.

This is a very fascinating play at the moment. Almost a game of chicken, I do agree. It is about risk and reward.

The question that comes to my mind is why did Cineworld choose to publish such a vague RNS with some options without anything more concrete.

What will be useful is awaiting TR1 notifications in the coming days. Are institutions and insiders reducing? What is the accurate trade count and split of buys and sells? Will we see further communication in the September results?

Sub 20p has been seen before, we saw 15p on wick if I recall back in 2021, this time we need to see where support will be found.

I am holding and have reduced my average significantly. I have not once posted for others to “buy, buy, buy”. Go by your risk appetite and I would never advocate all eggs in one basket. I am now content with my holding. Good luck, all.

I put my money where my mouth is and bought more. 12.6p and 10.01p today. I don’t waste my time engaging with day traders chasing beer money under the guise of being some kind of saviour wanting to warn others.

The volume of trades and closing price will give us an idea where this is heading.

At the moment, buys are some 74% higher if there is any accuracy to trade reporting.

Big volume today.

# Trades 8,930
Vol. Sold 48,696,769
Sold Value £5,538,507.61
Vol. Bought 83,880,021
Bought Value £9,690,462.76

Buys considerably more than sells, if we are to take the trades as accurate.

# Trades 4,491
Vol. Sold 22,120,597
Sold Value £2,742,686.95
Vol. Bought 37,562,134
Bought Value £4,740,228.97

75% of the Cineworld estate operates in the US. These anecdotal empty U.K. Cineworld cinema stories are frivolous. We will see how admissions are doing next month when Q2 is published. It was never going to be 80%. Expectations were around 70% to 2019 admissions so we shall see what they report.

The streaming argument has been done. Talent sued studios for pushing their movies direct to streaming. Big stars refused to allow a 45 day window and pushed for 90-120 days and have seen their movie take $1.3pm global. The recovery is coming but it needs more movies. Churn rate (subscription loss) for streamers is evident and Netflix set expectations of 2m subscription loss and then proceeded to publish a 1m loss.

The arguments cinemas are redundant could and were argued during the pandemic but now, post covid? Studios have shifted their strategy and pledged to support more theatrical (WBD, David Zaslav).

This board is seeing a lot of noise from those who are also nursing losses in other equities, not least Boohoo (CMA investigation underway). I don’t blame them for wanting to spam the BB and spook investors (not day traders) so they can trade and make some money.

“Despite a gradual recovery of demand since re-opening in April 2021, recent admission levels have been below expectations.”

“These lower levels of admissions are due to a limited film slate that is anticipated to continue UNTIL November 2022 and are expected to negatively impact trading and the Group's liquidity position in the near term.”

This is Cineworld setting expectations.

If Black Adam, Black Panther 2, Avatar 2 exceeds projections, it could go some way to help offset the anticipated low revenue during Q3.

Time will tell but there is no sense is being spooked, being emotional when an RNS with uncertainty has been published.

I took the choice to buy more this morning at 12.6p.

To answer your question, Forecaster, yes - I earlier bought at a dip of 19p which got my average down to 34p and let me sell at 104p.

Right now my average has reduced, it is still in red (as is the majority of my equities portfolio) and I continue to hold those too (which includes a modest Boohoo holding).

Yes that is right - don't be spooked.

Right now, options of dilution or D4E are being considered. The market will naturally react to the uncertainty if these will be entertained.

The RNS does however address that the Group's business operations are expected to remain UNAFFECTED by these efforts and Cineworld expects to continue to meet its ongoing business counterparty obligations.

So yes, I will say it again, don't be spooked.

Investors have already considered the risks and are aware that this is a recovery play.

Box office is recovering but it is known that at the moment there is a gap in movie slate until November when more films are released.

Why is there a gap?

Seasonal yes but it comes down to the fact that the pandemic not only closed down cinemas but also hurt film production particularly lower budget movies.

Take Black Phone - it cost $17m yet has made $150m. There is still an appetite for low budget movies and audiences are turning out they just need more moives.

"Hollywood has released fewer movies than a typical summer, LARGELY due to filming disruptions during the pandemic, and some genres, such as romantic comedies, are now more likely to head directly to streaming."

Source: https://www.reuters.com/business/uks-cineworld-warns-low-footfall-theatres-persist-2022-08-17/

Hollywood and exhibitors is a close relationship and both need one another. The pandemic has proven that ventures of streaming alone just don't recoup costs.

The day traders would have bought now - 30-40% was on the cards.

You boys can slow down on the multiple threads. This will settle at 13p

"The Group remains in active DISCUSSIONS with various stakeholders and is EVALUATING VARIOUS strategic OPTIONS to both obtain additional liquidity and potentially restructure its balance sheet through a comprehensive deleveraging transaction"

Any business would be foolish NOT to evaluate options.

I managed to buy a nice amount at 12.6p and have reduced my average and remain invested for the long haul.

Points to keep into account:

1. ~75% of shares are insider/insitutional held
2. Hollywood absolutely needs cinemas and multiplexes to make money else their experiment of day-date merely promotes piracy
3. Debt is $5bn but remember, it was $3.4bn (70% of that) in 2019 well before the pandemic and lockdown - the share price was 200p+ then
4. This option will send a message to any potential purchaser of the "cineplex judgement" and set expectations about what they can possibly recover

Good luck LTH!

Well, if any interested parties want to purchase the Cineplex judgement, they can expect it to be sold a lot cheaper all of a sudden!

This is a good find. Selling the claim would in fact be a good approach for cineplex to inject cash and the claim would need to be sold at a discount. How big is this discount? 75% discounted? This could help both parties “save face”. We all know the judgement is unenforceable and selling the claim could allow another party to settle it there after. An easy win for instance of it was sold for $100m. The party who purchases it then agrees with Cineworld to settle for $150m. That said, Cineworld could easily win the appeal and either dismiss the judgement amount for synergies or significantly reduce it further. Time will tell. For now, institutions and insiders continue to hold almost 75% of the shares in issue and remain as is.

Great to see patient investors being rewarded. I cannot believe this is not back to ~200p yet. A screaming buy given it has recovered 97% rents and in black.