Member Info for TheMadStork

Unfortunately US-domiciled stocks (such as DEC) are subject to 15% withholding tax if held within an ISA. You also need to make sure you've done a W8-BEN form or the withholding is 30%. HL automatically prompts you to fill one out upon first dealing a US stock but other brokers are more lax about it, so make sure you're not needlessly paying 30%.

I think DEC's stable, well covered, USD payout is more than worth the 15% charge, but it is certainly a factor in the seeming extreme cheapness of the shares.

RATR:

I don't believe any outright fraud has been committed. I do believe that is it perfectly obvious that there never was or has been over ever will be an offer for anything close to the current mcap - let alone the peak fantasy prices.

EUA have never said:
a)Who is bidding
b)What they are bidding for
c)How much they are paying

They have therefore not lied in an RNS or committed fraud but they have allowed the market (consisting of PIs fed garbage on Telegram/Twitter/LSE) to draw its own conclusions, in the full knowledge that any offer would be massively, massively less than the current mcap. That they have been allowed to do this is a failure of regulation.

What always gets me about the EUA bubble is how preposterously large it got off the back of some worthless perma loss making tiny mine and some equally worthless exploration assets. As I've repeatedly said, 5 min research into peers would tell anyone that EUA's 'assets' were only ever worth a max of £50m (pre war and at $3.5k Pd - obv completely worthless now).

So how did it ever get to £1.2bn mcap?! How we get to the stage where PIs are putting in £120k at a time? It's completely bonkers, and only possible due to massive, *massive* social media ramping. Those behind it should be thoroughly ashamed.

This is the type of horror story the likes of GMF, Tilly, Mac etc should have on their conscience.

Perhaps you would like to lay out a scenario in which CINE can manage to long term sustain an 8x ebitda leverage ratio without going bust? This is the (incredibly unlikely) absolute best case scenario of Cineplex judgement overturned + trading returning to 2019 levels.

The business will still exist, it will just have different owners (though I would not be at all surprised to see Mooky + family looked after in the post admin buyout.

I still have yet to hear a cogent argument from the bulls as to how they think CINE is going to manage a debt: ebitda ratio of 8x. This is the (incredibly unlikely) best case scenario, involving a complete overturning of the Cineplex judgement and a return to 2019 trading.

Covid or no Covid, the debt is completely unsustainable even if they manage to mitigate the Cineplex fine (which they almost certainly will not) and even if trading goes back to 2019 levels (jury still very much out on that given 2022 YTD figures).

There is absolutely no way out however you slice it. It's just a question of exactly when the plug is pulled and who does the pulling.

^...and the FCA, who are very very clear that shareholders must have a maximum of 5% of any residual value.

No. It must be at least 19:1 or the scheme is invalid and the only other option is administration.

Anyone thinking that the dilution will be priced above a max 0.5p (giving a post raise mcap of around £50m) is completely delusional. Anyone not taking up their rights will be wiped out, and those who do will be taking a massive gamble on a business with no assets, a tarnished brand (even with a rename) and severe restrictions on lending. This is by explicit design of the court.

I don't see any way out. Even if they win the appeal, and even if trading returns to 2019 levels, that is still gonna be something like 8x leverage, which is grossly unsustainable.

Given that they will almost certainly have to pay a substantial portion of the fine, and that a return to 2019 level trading is by *no means* guaranteed, especially in the short term, I would expect the fat lady to sing sooner rather than later.

If you mean me, as I posted before, I have never been long CINE and have a large short from 42p avg.

^EV even

FWIW I see administration as far more likely than either D4E or a capital raise. Admin allows all the unsecured debt to be wiped out and the business to be picked up intact at a large discount to current EVV. You can bet that the current management team will be looked after too.

A *minimum* of 19:1 dilution **is a condition of the scheme being authorised**. Anyone thinking that dilution is going to be less than that, or that the price of said dilution is going to be more than a tiny fraction of the current SP, is completely delusional.

From page 141 of the annual report:

The RCF is subject to a springing covenant when utilisation is above 35.0%. The covenant requires the Company to maintain a net leverage of 5.0x, tested semi-annually on a 12 months rolling basis. In 2020, the Company secured a covenant waiver on the RCF until June 2022 testing date.

There is absolutely no way that they achieved 5x EBIDTA net leverage on 30th of June. Even under the most optimistic scenario it would be more like 15x. There's no question the covenant has been breached.

That being the case, they either need a waiver, which they have not got, or to pay it down below 35% utilisation, which they also haven't done, per IR comms.

So what is going on and why has nothing been announced?

I'm not saying it's instant curtains. They clearly haven't officially defaulted, since that couldn't possibly be hidden. What this fiasco clearly *does* show, in my view, is that lenders are no longer willing to cut CINE the slack they once were. This bodes extremely poorly for future liquidity issues (plex judgement, rcf refinance, bond maturity etc), even if they escape the current jam.

It's only a matter of time before time is called, CINE goes bust and somebody buys the business from administration at a large discount to current EV.

Why have they not been granted a waiver, then? Previous waivers were announced well in advance, and IR comms have confirmed that they have not received one for the 30th June test.

Even if the judgement is entirely overturned (which it will not be), CINE's existing debt is too much for the business to bear. You only need look at the fact that they have not been granted a waiver on the RCF covenant test to see that lenders are losing patience already. If they can't pay if down to 35% utilisation then it is Goodnight Vienna soon anyway, even without the impending doom of the Cineplex judgement.

Why on earth would anyone put in a bid (even a nominal £1) when they would have to cover the full debt pile? What will happen is that the business, probably with brand intact, will get bought out of administration at a steep discount to current EV.