Member Info for RS2002

I’m not privy to the details of the lease negotiations. I will review financials in a September when I get my hands on the H1 report as will analysts. Thus, any investment must take the worst case scenario, my opinion is this has been factored in the share price amongst be artificially suppressed by short positions, capitalising on uncertainty.

What I do know is Cineworld have, directly and indirectly revealed how they are conducting themselves to remain solvent and hold enough cash to see them through this pandemic.

SIX days to 73% of Cineworld, it’s US Regal estate reopening. I look forward to that and further developments.

For now a huge element of uncertainty has been deferred to September 2021 (13 months) concerning litigation concerns. That meets my investment strategy.

Apt statement that: “ Simple. It will recover when normality can resume for its business, that could be travel, cinema or other leisure.”

Would you agree, if a company is lined up to see 73% of its estate reopen, generate income, support an enticing movie slate, as reason to support a share price increase?

I do.

Lenders know which side their bread is buttered.

When you have a track record of paying your debt on time and SCORING 62% HIGHER than you need to, it inspires confidence.

Given Cineworld and the majority of leisure activities was closed during lockdown, lenders would have been immature to ask for the same conditions to be met. That said and further to my earlier point, Covid-19 is NOT an exclusively Cineworld problem. Covenant tests relaxed or deferred is something lenders have accommodated for thousands of companies across a number of industries.

Given Q1 was largely unaffected, Cineworld was generating sufficient income to cover 1/4 of their yearly take. Couple this with hard negotiations, see earlier post re: Runcorn, tells me and the informed investor that they have undertaken significant cost savings and a programme to firm up cash flow during this time.

September, next month shall reveal that.

What I’m comfortable with is remaining invested, whilst they prepared for reopening in the US, next week which in turn will generate both box office sales for the movie line up inc. Tenet and New Mutants as well as PASSIVE income aka Unlimited membership subscription fees.

You quote July 2020 where uncertainty is there.
I quote August 2020 where it suggests otherwise.

“With no big refinancing obligations looming, Cineworld has liquidity available to survive up to 18 months of lockdowns, estimates Bank of America. Yet the stock is down by more than 75 per cent in the year to date.”

Source: https://amp.ft.com/content/35d6231f-16c4-43ce-93ba-b63c8ba6186e

Then we have this little nugget.

Re Runcorn Cineworld remaining closed despite please to open.
Cineworld stood firm, inspiring confidence to many savvy investors, they know how to run a business, as you wold expect with one that turned over $4 Billion last year.

"We are in conversations with the landlord regarding our current terms, which we feel are unreasonable, and are hoping to re-open once the matter has been resolved.

"But for the time-being, especially during this pandemic, we are unable to open the cinema and operate it at a profitable level."

Source: https://www.runcornandwidnesworld.co.uk/news/18643442.petition-launched-stop-cineworld-runcorn-cinema-closure/

*pre-Covid

Debt worries have been MITIGATED.

Debt may be Grade B on the Fitch scale but that is it - it's debt. Investors aren't trading debt securities so the grade B (like Rolls Royce btw) has a default risk of 4-6%, so 94-96% positive outlook for their debt, again from a private investor who is trading equities securities by way of stock purchase is not fazed by this.

Lenders are SO CONFIDENT in Cineworld they INCREASED their ND/EBITDA ratio from 5.5x to 9.0x.

Cineworld passed this test in 2019 at 3.4x SCORING 62% HIGHER than they needed to. No surprise that lenders were willing to relax this to 9.0x this year.

Cineworld will PASS their debt covenant test this December 2020 with ample room to spare.

The next test will be July 2021 at 5.5x and given the progress of a global vaccine and the V recovery that global markets are prediciting, Cineworld is projected to meet this covenant test and pass it too.

With regards to AMC Entertainment, good question on their Fitch score.

Cineworld is B.
AMC is ALSO B.

Now given AMC has recovered to about 50% of it’s pre-Covid price, Cineworld in comparison is at 25% of it’s pretty-Covid price.

This answers the question. Why is Cineworld priced at 50p given it has mitigated so much risk.

Answer: OVERSOLD.

If you want to sit on the sidelines you are free to do so, cheaper entry points are LONG GONE.

Investors are getting onboard to ride this back up to £1+ which can come within a matter of days given our proximity to the US cinemas re-opening in LESS THAN A WEEK.

To add: If I was a shorter, I would be very nervous and instructing my paid de-ramper squad to work over time.

The window for an exit is closing every day for them.

Regal set to reopen along with AMC, which has started to see a natural price correction will begin to translate to Cineworld very soon.

Fundamentals cannot be denied.

The current share price is where it is at because of the risk of uncertainty.

As that uncertainty erodes, the risk will erode and we can expect to see the share price to recover accordingly.

The best thing that happen was Canadian Group Cineplex breaching their debt covenants and breaking the terms of the Cineworld takeover.

It ended up SAVING Cineworld $2.3 BILLION DOLLARS in further debt.

From their contract:
"Should the Acquisition Agreement be terminated under certain circumstances. The Major Shareholder has also agreed to pay an additional breakfee of up to £28.3million"

To buy Cineplex at 4 x the premium when their value reduced to just a quarter - would have been a terrible outcome. No one, private or institutional investor could deny that.

Cineworld now stand to pay £28million as an exit fee - that is paltry compared to paying $2.3 billion.

If I found an extra $2.3 billion dollars in funding I would be elated as it meant I could weather the storm for a longer time should it be needed. Not that we believe Cineworld will need to, given their excellent negotiations with current lenders to increase the ND/EBITDA covenant test to 9.0x ratio, due December 2020. This means they only need to demonstrate earnings of 1/3 what they demonstrated in December 2019. Easily achievable given they were not impacted for most of the first quarter. Then we need to consider that lenders are aware of Cineworld’s proven track record to pass their covenant test. In December 2019, they scored 62% HIGHER than they needed to and sailed through. I imagine this influenced lenders to increase the 5.5x covenant test ratio to a very generous 9.0x.

That said the concern of litigation lingering over Cineworld’s head clearly spooked the market and investor sentiment.

Now imagine my elation to the news that the FIRST court date between Cineplex and Cineworld is set for September 2021.

Ample time for:

a) Cineworld to prepare an excellent defence to demonstrate that Cineplex did indeed breach MULTIPLE (not one) covenants of the Acquisition Agreement

b) Vaccines to not only be signed off for Phase 3 but see the inoculation and vaccine programmes of multiple governments under full operation. Trump has been quoted as stating he has the military prepped to deliver this in record time, as part of operation Warp Speed

c) Cineworld to have restored consumer confidence and a movie slate big enough to entice movie goers. It’s no secret that Hollywood has deferred movies to 2021 such is their appetite for theatrical release, rather than cut their losses and stream like PVOD.

I believe when this news makes mainstream circulation, we will see the market react accordingly but certainly for current investors this is fantastic news and will I still further confidence that they are in a good position to weather this pandemic as we JOIN global industries through it (read: this is not exclusively a Cineworld risk, as a certain deramper would have you believe so).

We are due a price correction very soon.

They are buying in installments, perhaps they were hopeful to see a drop in price to acquire cheaper.
There is some positional play happening here as they realise value when they see it.

I think we are going to see more purchases and some news very soon.

Good luck, all

- More than half of respondents have already resumed 70% or more of their shopping, dining, travel, moviegoing and performance/exhibition watching activities.

- With the gradual opening of cinemas in China, about 74% of respondents expressed greater eagerness to go to cinemas than they had prior to the COVID-19 pandemic.

- According to the survey, at the end of July about 84% of respondents agree that it is suitable to return to cinemas.

- About 83% of respondents said they were paying attention to news on the cinemas reopening, up from 73% in May and 62% in March.

- Among respondents who went to watch movies in the first week of cinemas reopening, 87% of respondents were satisfied with their very first experience at movie theaters after the COVID-19 pandemic.

- Good reputation and a high rating score was the most important factor for moviegoers to choose a movie to watch in the cinema.

I fully expect a similar consensus form US and European audiences when statistics are taken.

Is it any wonder CHINESE interest in Cineworld and cinemas is growing?

Source: https://www.prnewswire.com/news-releases/maoyan-84-of-china-movie-lovers-agree-that-returning-to-cinemas-in-july-is-appropriate-301112385.html

Now we have governments introducing much more strict rules on travel to European countries, many will be put off travelling because of quarantine restrictions.

What's the alternative? Stayaction activities, of course.

Now we have more openings happening, I can see a lot more footfall that will make its way to cinemas as well.

- Bowling alleys, skating rinks and casinos to reopen for the first time as well as indoor play and soft play centres
- Beauty salons, tattoo studios, spas and barbers in England to offer all close contact services and treatments
- Sit-down wedding receptions for up to 30 people to resume in coronavirus-secure premises
- Indoor arts and music performances with socially distanced audiences
- Sports and business events pilots to resume.

Given we also have schools set to open next month, national lockdowns are a thing of the past now. It's local only and I have stated this before, so I will say so again.

If millions of school children can sit, elbow to elbow, no face masks, no social distance and share materials and increase their risk to frequent touch points, sitting in a static, staggered seating with air filtration for 90mins (average) to watch a movie, where cleaning takes place after eaching screening, is far safer in comparison.

Source: https://news.sky.com/story/coronavirus-bowling-alleys-and-salons-have-lockdown-rules-eased-as-mask-fines-doubled-12048809

It also allows them to "paint a narrative" through popular culture. Hollywood and cinema is the ideal medium. I won't use the P word.

I think we could be seeing a lot more interest from the Chinese concerning Cineworld.

It's no secret they have been involved in production and distribution for some time now.

"The Chinese are financing some of your favorite films, buying theater chains, it is a growing trend. Major Chinese production companies teaming up with Tinseltown."

" If you go to a movie theater right now, it's a pretty decent chance you're going to be seeing a Hollywood movie with a budget partly from China."

Source: https://www.heritage.org/asia/heritage-explains/how-china-taking-control-hollywood

Huayi Brothers and Alibaba Pictures are just TWO of the major GIANTS in Chinese movie production and distribution.

Wolf Totem (2015) – distributor
Mission: Impossible – Rogue Nation (2015) – investor
Little Door Gods (2016) - distributor
Teenage Mutant Ninja Turtles: Out of the Shadows (2016) - investor
Star Trek Beyond (2016) - investor
See You Tomorrow (2016) – production, distributor
Real (2017) - investor, distributor (China)
Journey to the West: Conquering the Demons 2 (2017) - production
Once Upon a Time (2017) - production
Asura (2018)
Mission: Impossible – Fallout (2018) - investor
Next Gen (2018)
The Wandering Earth (2019) - Co-Producer
UglyDolls (2019) - investor
A Dog's Journey (2019) - investor
Gemini Man (2019) - investor
1917 (2019) - investor
BIOS (2021) - investor
Night at the Museum remake (TBA)

Exciting times ahead, I think

Excellent - free press coverage that will naturally implicate Regal/Cineworld, too.

You want to scare investors off comparing the covid-19 to a common cold that hasn't impacted global economies.
What little integrity you had left is now long gone. Ignore this troll.

Feb 16 2018 = Short Position = 14.09%
Share Price = 249p

Feb 21 2020 = Short Position = 14.67%
Share Price = 188p

Mar 20 2020 = Short Position = 4.37%
Share Price = 60p

So you can see we had a lower share price when shorts were reduced.

Agree Tog, the shorters are trying their hardest and their tree-shake yesterday just gave a lot an opportunity to acquire more cheaper shares.

This is going north of £1 the closer we approach Regal cinemas opening in the US (73% of Cineworld's estate).

Tenet box office will do the talking for global cinema.

I think WB has done a smart thing, release internationally is going to create a lot of pent up demand.

Now we are in a recession, holidays abroad will down and staycation activites like cinema are going to excel.

When I visited my local Cineworld I was told that they have about 70% of their audience being UNLIMITED card holders.
Given there is such a large catalogue of movies, I can see Hollywood bringing them forward once Tenet proves a success.

I do agree, it will DRIVE UP the memberships given such an enormous move slate. Cinema goers will want to maximise value.

It's already a GIVEN that Cineworld will PASS their ND/EBITDA covenant test from their lenders this December, given it is set to a VERY GENEROUS 9.0 ratio. They SCORED 62% HIGHER than they needed to last year but they only need to demonstrate an EBITDA of 1/3 which, given their current trajectory to open in the US next week will COMFORTABLY see them sail through that.

Next year in July 2021 when they take their next test at a 5.5x ratio, given this huge movie slate and demand for global theatre, we can only see good things for Cineworld.

Exciting times for shareholders. These current share prices will be looked at in disbelief when we are back at 150p+

Exciting times ahead.

The market is turning from Bear to Bull.