Alternative Plan for RoW19 Apr 2023 17:59
DISCLAIMER: reflects only my opinion and views and has not been submitted anywhere so far. I ask all LTHs to sharpen it up.
PART1:
On 18.04.2023 Cineworld PLC announced that together with its key stakeholders the Group has decided to terminate the marketing process for its ‘Rest of the World’ business (outside of the United States, the United Kingdom and Ireland), the “RoW Business” because the proposals did not meet the value level required by the Group’s lenders. As previously announced, the Group informed its shareholders that it continues to move forward with the proposed restructuring which does not provide any recovery for holders of Cineworld’s existing equity interests.
Here, an alternative plan concerning the RoW business, later referred to as “the shareholder plan” (subject to shareholder approval), is proposed. If implemented, the shareholder plan is expected to satisfy the minimum value level required by the Group’s lenders and other involved parties who have contributed to the DIP funding for the RoW business and importantly, it is expected to keep the business operational, maintain the public limited company status, and potentially, provide some recovery to the current equity holders.
The above could be achieved by using an opportunity to raise funds on the market in cooperation with the highest bidder from third parties which expressed interest in the RoW Business. Since the value level requested by the Group’s lenders has not been released, thus far, one can only use an estimated valuation in the shareholder plan which is rumoured to be in the range of couple of hundred millions and may or may not exceed the DIP funding which was in excess of 250 million (associated with the RoW business). Therefore, providing that the highest offer which has not met the value level of the Group’s lenders came anywhere close to the DIP funding associated with the RoW business, it is highly likely that the remaining amount (even of significant portion with respect to the best proposal) could be raised on the market via the rights issue for a split stake ownership of the RoW Business.
The shareholder plan benefits the existing lenders as follows:
It aims to achieve a fair value compensation for the Group’s lenders for the RoW Business which would exceed the highest proposal received so far by the amount of raised equity. Also, it is safe to assume that a proposed compensation would exceed “the hammer price” paid in the event of Ch.7 bankruptcy.
The shareholder plan benefits a key investor or a group of investors (the highest “RoW” bidder) as follows:
? By retaining the Public Limited Company (PLC) status of Cineworld
? By nominating its own team / executive candidates to the Board of Directors (the “BoD”)
? Listing on the London Stock Exchange and ability to raise funds from the market
? There would be no need for an immediate rebranding of the “RoW” cinemas, and thus, cutting instant expenses for a key investor.
Sign In
Follow the stocks
