It's not a fine, it's damages.
And they would be deductible in a Corporation Tax Comp
@Chesterdraws - because Mooky and the management team messed up hugely by specifically ruling out that a pandemic would be a reason to withdraw or agreeing a break fee.
If they weren't such big shareholders they'd all quite rightly be fired.
@kick - very kind but I'm no expert and certainly not in Canadian Law!
I would think that if this judgement was upheld on appeal, it would have to be paid all in one go, with Cineworld having to refinance either through debt or equity (Rights Issue) to come up with the cash. I would guess that an appeal would take 6 to 12 months to mount given the backlog in the system, and the world could look very different then, both in trading and share price terms - on the positive side.
An alternative might be to do it in specie - after all they are in the same business and Cineplex might fancy a few US cinemas (subject to debt covenants etc)!
Having read the judgement, I doubt that Cineworld would overturn the decision that they were at fault (although you never know) but the decision on the amount payable just looks wrong, and the Judge kind of admits that she only took it because it is the least worst option.
Factors such as the additional debt that Cineplex would have been saddled with wasn't explored because Cineworld was vague and there was little evidence presented
"[179] Cineworld argued in its oral submissions that I cannot take into account the expected
synergies without also accounting for the additional debt that the combined entity would have had
after closing. Cineworld refers to the Third Amendment to Credit Agreement dated February 13,
2020 that it says would have permitted the banks to place over $2 billion of Cineworld debt at the
Cineplex level and Mr. Israel Greidinger’s evidence that Cineworld planned to do so after closing.
This evidence was vague and uncertain. It is not clear to me what the timing of these post-closing
plans were nor is there any evidence of the financial impact that this would have had on Cineplex
(such as the amount of the debt service cost that would have been borne by Cineplex as opposed
to the other Cineworld borrowers under the credit facility). The evidence is insufficient for me to
apply any discount to the amount of the lost synergies that Mr. Rosen calculated."
Plus the synergies accruing to Cineplex wouldn't have been free - if Cineplex used Cineworld US HQ and other infrastructure and BoD etc, then Cineworld would have charged Cineplex a management fees for this.
(be interesting to know what happened in the Regal takeover because if debt was secured on that entity and management fees charged, that would be great evidence of what was intended in this case)
The more I read the more I think Cineworld were in the wrong by terminating the agreement but that the damages are out by an order of magnitude.
At least the battle lines are drawn for the Appeal, something which wasn't clear on this occasion which is why Cineworld didn't present sufficient evidence in the points noted above.
@kick - yup the K2 shorting was blatant, and the fact that they have form for market manipulation makes it look very obvious. However, they will have a dossier to back up their rational for shorting when they did - some reverse engineered spreadsheet or a legal opinion so when the regulators come knocking they can claim it wasn't because someone got sight of the draft judgement and tipped them off.
I mean at the most simple level if the judge is saying that Cineplex as a seperate legal entity would have benefitted from 95% of the synergies, it's clear that Cineowrld would have levied a management charge for it's services to Cineplex as a result, since it was the one that paid the premium to achieve those synergies.
That part of the judgement is not thought through, probably because Cineworld didn't address it.
I can see the amount cokming down a lot.
On the plus side, we know what the maximum downside is an arguably lots of it was already in the price.
The actual decision is here
https://www.ontariocourts.ca/decisions/2021ONSC0816.pdf
The Judge is clear she thinks that Cineworld were at fault and never intended to close the deal and Cineplex were angels -whatever.
The bit that is scant is the calculation of damages - she basically took Cineplex's figures at face value because Cineworld didn't provide any alternatives, so even if Cineworld can't overturn the decision that they were at fault, there should be ample oportunity to reduce the size of award at appeal.
Maybe Peter Parker has got the Wuhan Flu?
More people have died in Michael Barrymore's pool than from Omicron.
I suspect that a lot of this is due to two factors:
1) Erring on the side of caution (i.e. might as well make the expected number of cases/ hospitalisations/ deaths on the larger side as we don't want to get the blame for underestimating the size of the problem but if it turns out to be too big people will just be glad it's less or we can point to the actions taken as the reason why it's lower)
2) The Media (they only make money and have relevancy if they can get eyeballs/ clicks/ newspaper sales and the old adage 'If it bleeds, it leads' comes to mind. The more sensationalist and catastrophic the headline the more attention they garner.)
Add those two together and the worst case scenario becomes the base case in many peoples' minds and then that justifies massive governmental over-reach because they don't want to be blamed it it does turn out to be bad.
What is lacking is a cost benefit analysis of the actions: the other health cost (there are 50,000 'missing' cancer patients in the UK alone, and they won't be 82 year oldssat in an old folks home, they'll be in all the age ranges including very young people); the economic cost, the mental health cost, the social and educational costs etc etc.
And that's before you involve bad faith actors like politicians and people who gain economically by this being yet another crisis.
The system isn't set up to deliver a balanced view, it's a positive feedback loop looking for disaster.
The NHS is a religion that does a bit of healthcare and is in a permanent state of crisis regardless of how much money is thrown at it.
It compares very unfavorably with continental systems precisely because it is a political football - just Google "x days to save the NHS" and it's been going on for decades.
Masks in Glasgow.
Why?
If there was ever a place that would enthusiastically get an injection or three without any context, then that's Glasgow.
So. Much. Wrong.
Must. Resist.
Boris - the mendacious albino adulterer - is just using Plan B to 'Dead Cat' the fallout from the clusterf*ck that is the No. 10 operation.
Utterly unwarranted, and Omicron will turn out to be a damp squib - 95% of the adult population have antibodies - completely different to 18 months ago.
Cine will be beaten like a ginger stepchild over the next few days - come the New Year the bounceback will be explosive.
@Copper1 - when comparing with historic share prices you have to adjust for the fact that Cineworld is now carrying c$1.4bn of extra debt as a result of being closed which I calculate to be c75p.
So £1.50 would be the same as £2.25 in old money which is entirely doable when all the clouds have cleared - that's what it was before concerns were raised over the Cineplex deal in Dec 2019.
@ethansoton1
I've had Fortune Cookies that were less cryptic than that.
If Covid is in abeyance, the court case has gone away without material damage and the finances look good by March this is easily in triple figures, as high as 140p (my earlier post about 75p needing to be deducted from the pre-Covid price still applies so that would be a like for like SP of 215p which is perfectly sensible).
@Bonkers - I think we are violently agreeing!
Enjoy the rest of your weekend.
@Bonkers - the Government's reaction can be summed up quite succintly in the phrase:
"Something must be done, this is something"
There is very little evidence that masks make a meanful difference in preventing onwards transmission and since the Government is only mandating them in shops and on public transport *any* difference they make is nugatory.
The current restrictions are performative - they are there so people who are worried feel that the Government (who they believe for some reason is responsible for everything) is *doing something*.
I had my booster a couple of weeks back - absolutely useless.
Still got sod all 5G reception.
I wouldn't worry about new variants - nothing Made in China works very well after a year or so.