Member Info for RS2002

I don't particularly like to compare apples to oranges but I believe this is relevant.

Stagecoach a bus/transport provider revealed they had retrieved covenant waivers for the whole of 2021.

Source: https://otp.tools.investis.com/clients/uk/stagecoach/rns/regulatory-story.aspx?cid=273&newsid=1428880

Lenders are well aware that a business model, pre-covid being profitable, no matter how small the margins, reporting in the black, will be supported.

Mooky had advised in both RNS and television interviews that he is confident the covenant waivers will come.

Investors are optimistic because the recent newstream supports recovery plays. Cineworld is THE recovery play of 2020.

I also agree that landlords are faced with a dilema. In fact many who own large retail estates will know full well the implications of driving a cinema out of their retail park will have a downstream/upstream impact to other retailers in particular restaurants.

Cinemas drive footfall to high streets, retail and leisure parks.

In the current climate, it's not feaisble to throw out an established player like Cineworld. Competitors aren't looking to aggressively expand in this climate.

The sensible approach and again one adopted by landlords for AMC is to DEFER the 2020 rent to ~2030 .

Place that element of the rent on the back-burner, support the business recovering, get them to show some goodwill on the defered rent say 5% interest after 10 years (finger in the air) but ultimately support them.

Something to point out is that when the RNS was published on 24 September 2020

a) Furlough wasn't extended to March 2021
b) Cineworld was open, burning cash akin to a supermarket open without any food on the shelves
c) Hadn't received the welcome news that MULTIPLE vaccines were in the emergency approval stages and programmes defined to support immediete deployment to at risk groups

Fast forward 8 weeks, a lot has changed for the better as we have been advised the R rate has offcially dropped, the peak is now over and governments and advisors are reporting normality to resume in time for a huge 2021 for cinema.

@indepth

I appreciate the recent news has you nervous about your current position but what I have posted is certainly current.

From the RNS 24 September 2020 (that is 8 weeks ago):

"The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to OPERATE within the level of its CURRENT FACILITIES for at LEAST 12 months from the approval date of these interim consolidated financial statements, however the covenants are forecast to be breached at 30 December 2020, 30 June 2021 and 31 December 2021. The expectation of the Directors is that waivers WILL BE OBTAINED."

Now, I will take that from the CEO and BoD over an ESTIMATE from a newspaper any day of the week or a poster on a BB for that matter.

Source: https://otp.tools.investis.com/clients/uk/cineworldplc1/rns/regulatory-story.aspx?cid=655&newsid=1418344

*80% off its peak

What let's article down is the closing statement.

"Cineworld had an ESTIMATED $260m of liquidity at the end of August, and a (ESTIMATED) cash burn rate of about $50m a month."

Likely it has pulled that ESTIMATE of cash burn from Fitch or other stale sources. What it doesn't account for is the ACTUALS:

a) Cineworld have mothballed their cinemas - hibernating over autumn and winter
b) Articles have surfaced that some landlords aren't happy about missing rent
c) Furlough in the UK was extended to March 2021
d) Mooky and the Cineworld CEO issued an RNS (not an estimate) that they had enough headroom in their EXISTING facilities to carry them to September 2021.
e) Mooky's recent appearances in the press has made it clear, there is no immediete cash crisis
f) SAGE some of the hardest critics of the UK have cited they believe normality will resumed BEFORE SUMMER 2021, given the plan to innoculate the most at risk groups before March/April 2021
g) Advancements with rapid testing and Freedom passes are gamechangers as much as vaccines
h) The share price is 85% off its 220p peak, investors are aware of the risks but given the news, my opinion and belief is the rewards currently outweigh the risks right now particulary at this share price

It seems some posters didn’t pickup on the news back in September that the U.K. government have given business a green light to defer their rent without the risk of eviction.

The law states that commercial landlords are welcome to undertake legal proceedings, but they will not be able to remove commercial tenants like Cineworld.

This has been across the sector with the likes of Burger King, Boots, Cafe Nero and dozens either skipping rent, paying partial or deferring it for an agreed time.

Rival cinema operator, AMC who also own Odeon have agreed to defer rent for 10 years with landlords who, post pandemic will welcome rent returning for current periods but will be happy to support AMC, let their business return to income generation and then patiently wait for backdated payments.

In short, the news that Cineworld is being sued is old. The landlord for the Trocadero is just a new one. Cineworld will defend their position as they are protected from eviction and further, they have employed the support from a top legal firm and barrister who has called out that rent was appropriately withdrawn because of conditions set about in their lease that denied them use of the premises.

Some great quotes from Cineworld’s legal team:

“There has been a substantial and wholly unforeseen interference with the defendant’s ability to use and enjoy the premises”.

“The effect of the interference amounts to an event of supervening illegality that has significantly changed the contractual obligations of the parties under the lease”.

In short the lease agreements make it clear where the ability to use the commercial premises are denied, it breaches their lease agreements.

Roll on Monday when the market reacts positively to Han****’s announcement that COVID vaccines are undergoing FDA and MHRA approvals and will be ready in a matter of weeks, with a number of vaccine centres ready to inoculate the at risk groups. Oh and the stale news (insert lol), that Bloomberg announced of competing lenders offering imminent packages of support to Cineworld (ahead of additional liquidity, $200m landing from the U.S Cares Act).

Exciting times.

Sources:

https://www.mjbushell.co.uk/ban-on-commercial-evictions-extended-until-the-end-of-2020/

https://www.standard.co.uk/business/cineworld-aew-covid19-coronavirus-rent-moratorium-james-bond-a4570451.html

It makes for pretty entertaining reading.

The desperation from some of the posters doing their best to push a negative sentiment against a Tsunami of late Friday positive news disclosing multiple parties interested in financing Cineworld, almost makes you wince. I’d be lying if I said there wasn’t some schadenfreude, but also some sympathies.

The shrewd have recognised a beaten stock which, granted it has suffered the most during the pandemic has a lot to work on given the announcements of multiple vaccines which are now OFFICIALLY being reviewed by the FDA and MHRA, for imminent approval.

It’s a daunting time for those who either decided to abandon ship, couldn’t hold their nerve or those who either bravely or foolishly kept a short open when 15-17p was presented a month ago. A time many long term investors used as an opportunity to drive their average down to the 30s or even lower. These investors were berated, told they were betting a losing horse, yet they saw the drop recover over 50% within a matter of 1 hour. These are the investors who deserve to be rewarded for their patience, risk appetite and belief that fundamentals in a sound, profitable business model (pre-covid) exist. These are the investors who are aware that an extensive catalogue of blockbuster movies would prevail to 2021 supporting Cineworld as one of the biggest recovery plays, some investors will bear witness to, possibly only once in their lifetime. Dramatic? Perhaps.

What I take is:

1. Cineworld quoted in their RNS that they had sufficient liquidity to September 2021.
2. The US Cares Act will afford $200m to Cineworld in Q2 2021.
3. Cineworld are in negotiations with multiple parties to discuss additional facilities, perhaps these will remain undrawn and act as a buffer? Time will tell.
4. Studios remain steadfast to support theatrical release given the losses they will see with streaming.
5. The share price was shorted at 14% and was 164p, given it is now 7%, this doesn’t concern many have we have witness a recent short squeeze, expect another on Monday.
6. Mooky has a personal family stake and isn’t going to let this fold.

Roll on, Monday.

I haven’t been posting much, I accepted the volatility with cineworld and being long, means I don’t to worry about fluctuations. What I keep an eye open for is news. The opinions of many who frequent this BB are significantly skewed based upon their investment strategy.

What I will say is the most recent threads I have read over this weekend have reeked of desperation. Shorters and those squirming that additional liquidity is being afforded not from one source but multiple competing sources should understandably make many with open shorts feel very nervous this weekend.

Good luck to all investors. Shorters in particular; they will need it the most!

Huge milestone and the approval, due next week for Emergency Use Authorisaton (EUA) is going to be very well received.

Really encouraging news that the NHS are mobilising 42 centres to support vaccination deployment.

I believe the market is reacting positively to this.

I posted something similar on the Cap Reg board here: https://www.lse.co.uk/ShareChat.asp?ShareTicker=CAL&share=Capital-and-Regional

Source: https://www.lse.co.uk/ShareChat.asp?ShareTicker=CAL&share=Capital-and-Regional

Interesting article in the Guardian today on the need to mobilse 42 sites for vacciniation centres.

Source: https://www.theguardian.com/world/2020/nov/20/nhs-prepares-dozens-of-covid-mass-vaccination-centres-around-england

Am I stretching when we should consider Cap Reg have an opportunity to fulfill or at least partake in these?

Cap Reg have delivered some commmunity hubs and centres for the NHS.

Source: https://capreg.com/about-us/responsible-business/case-studies/the-mall-luton/
Source: https://capreg.com/media/3215/2020-interim-results-presentation-final.pdf (slide 23)

- We are in advanced discussions with the NHS to open a 20,000sq. ft. healthcare centre at Exchange, Ilford
- Interest in developing similar concepts at three of our other centres

What are these similar concepts at three of the other centres? Could these be the vaccine centres/multi-purpose?

Food for thought but I think Capital Regional could be a front runner fo this initiative...

Debt for equity?

I did post earlier that my belief is

a) Cineworld have enough liqudidity and facilities to draw down to last them until Sept/Dec 2021, based on the recent RNS from the BoD

b) If additional financing was required, a convertible bond which is a fixed-income debt security that pays interest, but can be converted into common stock or equity shares would be the right vehicle to support Cineworld. PJT partners facilitated such for Latam airlines and managed to get them OUT of Chapter 11 bankrcuptcy. Furhter more, Cineplex, albeit less than $1bn, used a similar process.

It's a win-win for a lender. Utilise a bond that pays interest but has the option to convert to stock when the share price rises and allows them to cash in early should they wish.

I'm looking forward to the debt waiver soon.

35p Average
Up 37%
Target 140-150p (2021 Q2)

Absolutely right, Hosai.

It’s pre-IRFS 16 $4bn excluding lease liabilities has debt at ~$4bn with a maturity of 2023 so ample time. It’s not being called for settlement now. There is still years before it’s due.

Given the negotiations and conversations with landlords, even RNS confirming successful defer of rent, including leases is just for reporting IRFS 16 standards but can be excluded to get the actual amount of debt.

Cineplex as mentioned had lenders via brokers (like PJT) underwrite a new convertible, unsecured subordinated debenture/bond. Convertible to shares in the future. Given the cheap price of credit, lenders need to make money too and will eye Cineworld as an investment to make money for a small amount; they don’t need to cover the whole ~$4bn given its maturity of 2023.

That said Cineworld have declared they have sufficient facilities and liquidity to September 2021/December 2021 given they hibernated earlier so the sensible investor will await debt waiver news and a further update from Cineworld and their partners.

Great list, Drifty.

Some more to add

6. Furlough extension in the U.K. to drive down operational costs
7. U.S. CARES act due to pay Cineworld to the tune of $200m before Q2 2021
8. Collaboration with PJT partners who have managed to successfully secure a new bond for a previously filed Chapter 11 carrier, Latam airllines. Will likely explore a convertible bond to avoid a placing akin to Canadian cinema group, Cineplex who secured the underwriting of a new “convertible bond” that allows a new lender to convert the bond into shares in the future (when the share price recovers) or continue to receive interest for the loan.

Source: https://www.newswire.ca/news-releases/cineplex-announces-closing-of-275-million-offering-of-convertible-debentures-875478891.html

Time to trade the x3m for a 320d

They saw the rally last week to 65p and sold a small amount (1.38%)

Date: 11/11/2020
Position: 8.58% -> 7.2%

This was just advertised now.

So they still hold well over 5% and must see this continuing up.

Agree, I would call ShorterGuy and Boix gamblers because let's face it, when you spreadbet and go short or leave a short open at 24p, you're doing just that. Gambling. I suspect that is "haram" for ShorterGuy, he won't admit it, though.

Boix, the earlier estimates from analysts and speculative media articles was put to bed from the CEO and Board of Directors of Cineworld.

Suffice to liquidity to operate to September 2021z

This was posted before but once more for the benefit of new investors researching the company.

Date: 24 Sept 2020

“ The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be ABLE TO OPERATE WITHIN THE LEVEL OF ITS CURRENT FACILITIES FOR AT LEAST 12 MONTHS from the approval date of these interim consolidated financial statements”

(Sept 2020 + 12 months) = Sept 2021

This sufficiently put to bed, the earlier ESTIMATES that liquidity would run dry by Nov/Dec 2020.

There is no liquidity crisis.

There is no urgent need to capitalise raise.

$200m is also due well before September 2021, June 2021 latest from the US CARES Act.

Cineworld will ride out this storm and with Trump’s almighty push to have vaccines available in a few weeks, all eyes will be on this recovery play, Monday.

I’m not going to make a prediction, I’ll let the market do the talking on Monday.

Well done investors for remaining patient. Rewards are coming.

Source: https://otp.tools.investis.com/clients/uk/cineworldplc1/rns/regulatory-story.aspx?cid=655&newsid=1418344