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I had to have two bites of the cherry to understand that, but now I do, that's very useful.
What I assume it means is that 2019 is 100% and thus the graph is the delta to 2021 (non-cumulative, natch) .
Is the line labelled Linear (Actual) "a line of best fit" and thus ceteris paribus (non bondicus!) assumed trajectory?
Oh, um, £2.53 by Xmas, *yay* (just to keep the posse off my back)
I think that the point of law will revolve around Cine agreed to buy a business for $X.
There were a bunch of covenants set out that ensured that what Cine agreed to buy was in fact what it ended up buying.
If it can be shown that Cineplex breached those covenants so that if the deal completed, the business that Cine acquired was not as agreed, then it is able to withdraw without penalty.
Many of the lines of argument advanced seem to try to suggest that Cine delayed so that the above was the case, but I am unaware of any clause that compelled Cine to try to do otherwise.
In fact I think it is beholden in Cineplex's management to ensure that the business that they were selling was as described, and at the moment, that doesn't look the case.
@KickThePuss - What would constitute success for Cineworld? That's a tough one and my guess would be anything that closed this down and removed the uncertainty preventing institutional investors considering Cine as an investable proposition as the headline $2 billion claim would wipe out the equity tranche.
So, my highly unscientific, finger in the air number is anything under $50m.
If the claim for the control premium lost and the claim for refinancing and lost synergies are dismissed (which is how they got to c$2bn), then you are into abortive deal costs and costs of the case which (I would guess) would be under $50m and in the great scheme of things is chicken feed compared to the removal of the uncertainty.
Personally, I think that a no score draw is the right outcome and both sides should drop hands an bear their own costs, but I think there are too many egos and professional reputations on the line for that to happen.
I suspect that whoever wins or loses will come down to a technicality, which is almost impossible to predict, and largely hinges on the judge's view.
What I think has become clear is that the scale of any damages is risible. Cineplex (as apposed to its stockholders who are *not* a party to this case) has suffered very few losses. Sure, professional fees, which might be in the tens of millions category, would be a real loss, but anything else is strictly for the birds.
The claim for billions for the loss of the premium that would have been paid by Cine is a joke - stockholders suffered that loss, not Cineplex, and even if they were party to the agreement, they still have the control premium which they could sell in the future.
As to financing costs, where Cineplex say that the combined entity could have refinanced more cheaply, that's a moot point and hard to substantiate. Arguably, in the real world a Cineplex/ Cineworld combo would have had to pay more due to Cineworld's high gearing.
Finally, the quantum of damages to Cineplex through lost synergies is a weird. Cineplex wouldn't reap any of them since to achieve them Cineplex wouldn't exist, and even if it did remain as an identifiable entity, they would be split between the two businesses, and one would assume, flow to the stockholders through a higher stock price, which is not within the scope of the hearing as it relates to stockholders.
This just looks like a massive waste of time and effort and in reality should have been settled out of court by Cineworld paying a few millions to cineplex to go away so both could focus on their current difficulties which are very real.
Hi Bonkers, I doubt that anything that goes on here will impact the case, otherwise it would be an easy task for either side to collapse the case if they thought it wouldn't go the right way by flooding the bulletin boards!
All well here although I took some time away as there was little news and since nature abhors a vacuum the BB was filled with less than useful content. This case, however, could well be the inflexion point for Cine, assuming that it goes reasonably well for Cine (i.e. less than $50m payable).
It's hard to assess the merits of the case at this stage, although it is clearer than even if Cine were to lose, the quantum of any damages would be at least an order of magnitude lower than that claimed, which is to be expected as in any litigation you claim the maximum and then row back from there.
The (small) amount of the trial I have heard so far can be summed up as although Covid was excluded as a MAC, many of the actions that Cineplex took in response to Covid meant it broke a whole bunch of other covenants.
I think that it's worth pointing out that half of that USD8 billion of net debt is lease liabilities, which is only 'debt' in accounting terms. Sure, there is a legal liability to pay it, but you *do* get the use of the cinemas in return, which is quite improtant for a cinema company.
The Australian version presumably has Q issuing Bond with a hi-tech mask that has a homing beacon hidden in it to make sure that he doesn't go out of the house for more than the State mandated 30 minutes a day and a DB5 that shoots hand sanitiser out the back to ensure that any chasing baddies are Covid clean.
Doubled Vaxxed Seven - Licensed to cower behind the sofa in case he catches a bit of a cold.
@HNS_77 I think that your analogy is spot on - the *absolute* maximum that could be claimed would be the difference that Cine agreed to pay and the share price since, but that would be a loss of the shareholders (who ar not a party to the agreement) and so isn't relevant here.
I would put a finger in the air and guess that the top end that Cineplex could claim would be USD100 million, but to get to that figure you'd have to chuck in the kitchen sink on top of legal & accounting fees such as bankers commission and possibly additional financing costs etc.
I doubt that Frustration would work in this case - Canadian law may be different but has English Common Law at its root and Frustration only applies when a contract *cannot* be fulfilled - clearly Cineworld could have bought Cineplex as envisaged albeit it would be a really bad price to pay, but Covid didn't make it impossible.
However, I think Cine may get away with it for other reasons - this article covers some good points:
2. Cineplex Inc.
Cineplex Inc v. Cineworld Group plc et al. (Court File No. CV-20-00643387-00CL) involves a $2.8 billion transaction where Cineworld sought to terminate the transaction on June 12, 2020. In that case, final order approval had already been obtained from the court prior to the termination, and the parties were in the process of obtaining the regulatory approvals necessary to close, when the termination notice was sent by Cineworld Group.
Unlike Rifco, Cineplex did not seek an order for specific performance and to force Cineworld to close. Cineplex accepted what it said was a wrongful termination, and sued for damages. The question of how to get an order in a reasonable period of time within the timeframes contemplated by the parties for Closing, requiring the parties to close, was therefore not raised. Other very interesting questions were raised, however. Beyond the usual questions about the scope of the MAE clause (in that case, the parties specifically excluded pandemic-related events from the scope of the MAE), the Cineplex case raises very interesting questions about the quantum of damages.
As we mentioned at the outset of this article, an Arrangement Agreement is typically between the purchaser and the target company. Shareholders are not usually parties to such agreements, and they are rarely parties in public company transactions. In its Statement of Claim, Cineplex seeks full recovery of the total amount of the purchase price of the transaction — $2.18 billion, with other relief pleaded in addition or in the alternative. Even suing for the premium of the transaction that shareholders would have enjoyed raises questions: are those really the company’s damages at all? And even if the company could make such a claim for shareholders, the shareholders still have the control premium, and in theory could sell it again. Are there issues of double recovery in such a case? There are interesting questions to be resolved, in addition to all of the other questions that a MAE case would normally raise, of the kinds described earlier.
Even though Cineplex has not sought specific performance, it is proceeding at a relatively rapid pace, with a trial expected this fall.
I forgot to mention, short term this is likely to be even more volatile than usual since August has thin trading and all the decision makers are usually away on holidays leaving the juniors in charge. Who knows what they might or might not do! Buckle your seat belts.
I can't see tomorrow as a massive inflection point and still expect the share price to be highly volatile without a clear direction until (say) October when the "Mega" slate kicks in and peoples' perception of Covid is that it's a chronic disease we are going to have to live with without shutting down the economy.
Well, one of the key overhangs is the Cineplex case, and although I expect bullish and comforting words, I doubt that there will be much of substance, since it takes two to tango and if there had been a material development, then since Cineplex is a listed security, it would also have to disclose any developments so as to prevent a false market in its own shares. Also, for those of us who have been involved in such things, it is normal to try and manage the other side's expectations of a settlement by briefing to the most advantageous end of the permissible envelope.
Also, there can't have been any massively helpful numbers on trading, since the Box Office is already widely disclosed and market share is more closely tied to geography than the quality of the experience, so I expect that Cine will have performed in line with the wider market.
Short term, my main concern is with the losses that have been built up during lockdown, and, after re-opening, with Opex up but without the concomitant substantial bump in revenue.
Previous guidance was on a (IIRC) USD60m per month cash burn, but to anyone who is an accountant they will know that this is a baby number to allow investment bankers to take cash and liquidity facilities and divide them by the 'burn rate' and come up with a period of time that the company has to 'survive' without a further equity raise. It was always likely that that USD60m was an optimistic assessment based on the best of all worlds (e.g. landlords forgiving rent) whereas life can be much more complex and spikey.
On the plus side, the fall from £1.20 to c60p probably has a lot of the above (and more) baked in, although the raising of an additional credit facility is worrisome. Om the one hand, you raise finance when you can, not when you need to, but this is likely to be pretty expensive money and since most of the trading upside already goes to debt rather than equity, I would view that as a further shift in that direction.
To those who think this is overly negative on Cineworld as a business, it isn’t – I strongly believe that Cineworld’s cinemas will recover and be very profitable long term. What concerns me is how that value is split between the debt and equity slices of the capital structure, and having management so strongly aligned to the Greidinger Family Trust and the desire to prevent it being diluted at any cost, I worry that they have bet the farm and that that bet may not come off.
Re sale of Retail Parks - alas that's what happens when you overgear a business and hit an unexpected shock like Covid.
They had to sell to raise cash and so were a distressed seller. A shame I know but there wasn't much else they could do.
I take comfort that RRG has laid out a sensible strategy to work the current portfolio mix to maximise value and that there are two well capitalised shareholders on the register who are clearly in for the long term. The headline drop in valuations was half rent roll reductions and half yield (market sentiment) both of which you would expedct to reverese as the economy improves. Even after that we still have a NAV per share at double today's share price. I think we have reached an inflexion point and although it will be a hard grind upwards I think we can now expect the balance of news to be good rather than bad.
"If it bleeds, it leads."
The mainstream media is only interested in the headlines being as frightening as possible as it drives ratings.
The truth is warped and spun to fit a narrative.
Burley, "Beff", Boulton, Marr, Peston etc have shown themselves to be narcissistic charlatans.
The pandemic is over in the UK as off now.
That doesn't mean that Covid has gone, but it no longer constitutes a public health emergency and no longer merits draconian impositions on the public.
You won't see that on the BBC, Sky or ITV, but look at the numbers, it's true.