Member Info for RS2002

- Single studio amongst hundreds
- Universal state that for BIG blockbuster titles, they will run the full theatrical window
- AMC state that with the smaller titles, usually the first 17 days will see the majority of patrons and there after it's low attendance so this could be a preferred model

At the current SP, Cineworld are OPENING and have been taking bookings since yesterdy evening.

Some Cinemas showing 30-50% bookings already for screenings of Unhinged.

Also note that Citadel Advisors LLC REDUCED their short: -0.13% so they are actively closing positions ahead of the UK and US re-open.

They realise the bottom is found and the uncertainties are being removed hence the de-ramping on PI boards to encourage those to sell.

@Nofear, worry not - shorts have been known to close down very quickly. A lot of the uncertainty is around the US, their numbers, if their mid-late August date will be maintained ahead of Tenent.

There also seems to be a delay in the reporting; it's reflecting a change on 27/07.

Source: https://shorttracker.co.uk/company/GB00B15FWH70/

@Moola I've read the same here:

"If a movie is performing like gangbusters at the box office, i.e. like a Get Out, Fast & Furious movie, Illumination title or Jurassic World, Uni won’t simply cut and run and put the feature on PVOD. They’re apt to live the green of the theatrical run out."

This suggests if the movie is popular/big enough, it will live out the theatrical window. Again this is just Universal but nonetheless, it bodes well that they won't strangle the cash machine that is movie theatres.

Source: https://deadline.com/2020/07/universal-amc-theatres-theatrical-window-crush-pvod-agreement-1202997573/

Calm down dear.

It’s a SINGLE studio, Universal who have a back catalogue of movies they need to clear out.

This doesn’t indicate the other studios who respect and maintain the theatrical window and the terms are length of this agreement remain unknown thus to speculate would be just that.

Phew.

Risk of default of B grade debt = 4-10%
Back to the subject of this thread = risk of bankruptcy 7%

So the scores on the board are... drum roll:

- negative outlook ~10%
- positive outlook ~90%

Do you need a calculator to work that out?

The Fitch report has been in the public domain for two months and maintains that Cineworld has no immediate refinancing risk with its current RCF maturing in 2023 and its first term loan maturing in 2025.

The market has priced this in and to attempt to misguide Cineworld’s finance position with the same tired manipulation, merely undermines your integrity and after such a long exhausting chain, merely tells PIs that this is a moot point and not one that will drive a decision to sell.

Good point, Put. We need to see sight of the terms and the movies that are applicable to this shift in window. I would doubt Universal would extend this to big blockbuster titles. They would be choking the golden goose.

Universal aside, I re iterate they Warner Bros are wholly against this and no other studio is suggesting the same.

The negative grade you tout is for the loans, not the company. Cineworld have no desire to sell off their loans and given they maintain and with a maturity of 2023, pose NO material risk to the company.

In comparison, Rolls Royce also have a B grade, debt bond score.

The negative score attributed to the loan is exclusively down to the uncertainty of coronavirus and that is not something exclusive to Cineworld or the cinema industry.

From Fitch:

Excluding the acquisition of Cineplex, Cineworld has no immediate refinancing risk with its current RCF maturing in 2023 and its first term loan maturing in 2025. We believe Cineworld should be able to improve its liquidity, through increasing its existing RCF.

Cineworld did just that.

Financial and funding crisis averted.

Given the backlog of movies that have been held up, the adapted terms could in fact bode well for this SINGLE studio, Universal.

They would be able to clear out the backlog and allow Cinemas to process an increased catalogue of movies.

Once more, this is NOT net debt. You are taking into account forecasted leases as a debt. One could argue that forecasted turnover should also be brought to the table now as well. It would suitably negate the sum.

Leases have since been renegotiated so your accountancy faux pas to misrepresent net debt is exposed.

Net debt for Cineworld is $3.5bn as of close of 2019.

This is becoming ad nauseam.

The AMC thread is indicative of negotiations with ONE studio. That is a lone wolf amongst the approach the balance of studios take which prefer to maintain the exclusivity of the theatrical window. Further information is required, specific to Cineworld to understand what this means for long term value.

One studio (Universal) to modify the theatrical window is not indicative of the direction the entire industry wants to take.

This is applicable to Universal and we are yet to find out what the negotiation are with Cineworld.

What we do know is that Warner Bros, made their position very clear on VoD. They don’t want it interrupting theatrical release.

Source: https://www.theverge.com/2020/7/23/21335601/tenet-release-date-delay-streaming-theatrical-chrisopher-nolan-att-warner-bros

Give the choice as an investor, I would rather Cineworld have the agility to renegotiate leases with landlords than own depreciating assets with fixed, unremovable costs.

Regarding cash flow, the $2.3bn saved on the fallout of the Cineplex takeover (no fault of Cineworld, but because of debt covenant breaches by Cineplex) was acknowledged by Fitch as a significant reason the Ratings Watch Negative (RWN) was removed when they also confirmed Cineworld addressed the short term liquidity concerns.

Correct, Hosai.

In fact Cineworld did a shrewd move in 2019.

They sold 17 cinemas in the US for $286m and then leased them back.

Hammersons Plc for instance was recently exposed, revealing they were over a barrel with tenants and coupled with the eviction ban, got just 13% of quarterly rents.

Cineworld have negotiated well and advises their costs are 70% variable.

Liquidity and cash flow isn’t going to be an issue until next year, Q2 2021, at which point we can assess the share price and further cost reduction programmes the organisation will have implemented.

Source: https://uk.reuters.com/article/cineworld-grp-realty-income/cineworld-to-sell-lease-back-17-us-based-cinemas-idUKL4N22R1TG

Fitch estimated the cash burn. They have no idea on just how far Mooky and the BoD have renegotiated their leases.

Mooky was quoted as saying that the company would NOT continue to pay full rent of around $50M a month should cinemas shutter. “We know the contracts and the laws and our partnerships with our landlords who have been with us for decades, so taking that assumption is very, very conservative.” He later added that in Poland, for example, Cineworld will NOT pay rent “at all” while cinemas are dark.

That gives you some kind of idea just how much the negotiations have gone where Cineworld have squeezed cash flow and couple this with zero contract hour staff, one would expect most staff will be students where a mutually flexible work partnership suits both parties.

Cineworld will disclose their H1 results in August and it will reveal a positive cash flow and reduced costs incurred to date, factoring the 3 month closure.

Cinemark CEO quoted as stating that even at peak periods of time in a normal environment, their occupancy levels range from 20% to 30% and can operate profitably during those scenarios.

He added that Cinemark has seen attendance as low as 10% and still was able to turn a profit.

Source: https://www.cnbc.com/2020/04/15/cinemark-offers-a-look-at-movie-going-post-coronavirus.html

Net Debt = Short-Term Debt + Long-Term Debt – Cash and Cash Equivalents.

As Hosia says, framing leases earlier declared as expenses I may as well frame the projected forecast of another $4bn turnover now.

The bottom line is Cineworld have sufficient liquidity to keep them going through the pandemic period.

70% variable costs, re-negotiated leases, reduced screenings mean prolonged sustainability.

Current SP has all of the above factored in.