Member Info for Wellington99

Looks like the Algos have picked up on something and are dumping the stock.

Now 16% down. Very odd.
Only news is https://www.thetimes.co.uk/article/amigo-loans-founder-hammerson-shopping-centres-9c8jll8hb
He certainly has more of the kiss of death than the Midas touch!

@Tegop
Yeah, the ST is misleading.
A Chapter 11 would just put everything on hold and it could mean that Cineplex wouldn't get anything from a subsequent reorganisation but it would also mean that shareholders would be wiped out first.
In short Chapter 11 would not mean that Cineplex get shafted to the benefit of stockholders - there is no magic bullet to the Cineplex issue other than a successful appeal.

For someone called NOFEAR, his posts reek of desperation for new bagholders at Capita.

I doubt that there will be a settlement with Cineplex, unless it is for buttons. Cineworld management (and most of the legal copmmentary I have seen) believe that although the verdict probably won't be overturned, the damages will be massively reduced.
The Chapter 11 stuff is waiting in the wings in order to allow Cineworld breathing space to get to that outcome which is probably due in late November.
It's a massive gamble by the BoD, and also suggests that there won't be any debt for equity swap until after that event - if the BoD believe that that judgement will go away, why would you transact from a position of perceived weakness when if you can hold out for another 3 or 4 months you can do so from a position of strength?
So the talks are most likely window dressing and a delaying tactic. If/ when they break down the Chapter 11 and the final roll of the dice.
Who knows what the actial outcome will be in November but remember, if they swap debt for equity at todays prices Mooky will have wiped out his family's wealth built up over several generations and I doubt he would do that lightly.

I think that the point being missed is that the equity part of enterprise value has been worth over £3bn, and could get there again if trading, legal appeal and capital restructuring are sorted out. Even if there were a significant dilution then the total value of the equity slice would likely increase and so the share price would rise as bankrupcy & liquidity concerns would be taken out of the equation. So 4p could easily become 40p again quite quickly.

@email scrip div or cash div there no corporation tax implications

I would say that most of this is good news.
Cineworld's major issue has been poor corporate governance for many years and it would seem that this current situation is a catalyst for much needed change - a shift away from a focus on expansion at any cost and a focus on profitability. Shrinking the balance sheet and a restructuring of the capital structure is also long overdue and I think if the Greidingers hands can be prised away from the controls and a professional management team put in place focussed on shareholder and creditor value then this is good news all round.
I've dealt with many institutions who lend to corporates and the last thing they want is to lose money, but the *second* last thing they want is to swap their debt for equity if it can be avoided. If they wanted to own equity then that's what they would have done in the first place plus it is much more mananegment intensive and also is an admission of failure on their part.
So much more likely is a wholsesale business restruturing, with disposals to raise cash and an equity kicker for the debt holders to let them share in some of the upside.
After reading this I think a complete equity wipeout is much less likely than was presented by WSJ on Friday and the shares (at 4p) are probably oversold on that basis (IMHO, based on very sparse information etc etc).
Also for those who think that Chapter 11 "makes the Cineplex claim go away forever" I would remind them that that would only be the case if all equity holdings are wiped out first.
One of the most sensible posts I have seen on here is by LTHcine who suggests that a Chapter 11 procedure might be used to push through the corporate governance chnaged mooted in the ST article but also to allow the business to tread water until the appeal case verdict is heard thus buying time to wait and see the verdict. If that claim isn't reduced substantially then all bets are off and a full debt for equity swap is much more likely, but if it is reversed or massively reduced then a partially slimmed down Cineworld with new management in place and that spectre removed from the equation then raising new capital would be much easier.
Let's just remember that the sole reason that that case became an issue is because the Greidingers removed the usual MAC/ MAE clause that would have allowed them to walk away for bothing because of Covid. Why they removed it is unclear but it would be most likely because they wanted to bulk up the number of cinemans to become No.1 regardless of the risk. The Greidingers have to go if Cineworld is to flourish.

@Alboumphoto
I had a wry smile at the one.

@Bonkers2021 - yes it does matter, because the issue appears to be one of liquidity not solvency.
Let's make the numbers easy amd say that there are 1 billion shares and they are worth 50p so the market cap is £500m.
Then say that here is a 1 for 1 Rights Issue at 50p (it would be discounted in reality but we are making the numbers easy)
That would give Cineworld £500m of new cash and the market cap would then be £1bn with each share worth 50p as there are twice as many shares in issue. Putting aside the complicating legal judgement for now, one would expect the overall market cap would rise as the major issue of being over geared would be much diminshed and so would likely rise by (say) 50% or even more. Remember it was worth nearer £4bn a few years back.

Mooky's family's shareholding has been the biggest problem in this whole affair.
Because he didn't want to be diluted, all the various acquisitions were financed by debt instead of equity thus leading to an overleveraged balance sheet and instead of raising new capital via a Rights Issue when the price was over £1 which would have solved the liquidity and debt problems with manageable dilution.
Nope, instead debt was piled on debt.
Worth remembering (IIRC) when the initial problems hit he had to refinance his own holding which mean the had to sell so shares AS HIS OWN HOLDING was also leveraged to the hilt.

From the FT: Global City Theatres, the family trust of Cineworld chief executive Mooky Greidinger, said on Monday that it had agreed to sell a 7.9 per cent stake in the business for about £116m. Before the sale, the Greidinger family owned 28 per cent of Cineworld through GCT. It has sold 4.5 per cent of its holding to an affiliate of the Singaporean sovereign wealth fund. Citi analysts estimate the shares were sold at about 107p each — a discount to Friday’s closing price of 111p. The company’s board said the Greidinger family “remains a committed long-term holder” of Cineworld shares. The stake sale was, the company said, in order to restructure a margin loan provided by HSBC and Barclays into a secured corporate credit facility.

The one silver lining to this is that *IF* the rumours of bankruptcy are true then he and his family will be wiped out, so expect him to do everything possible to avoid it. Let's just hope that doesn't leave the rest of the stockholders to twist in the wind whilst he makes out with a lifeboat.

@Hexam Yes, the assumption that every twist & turn is Mooky playing 4D chess to bring Cineplex to the table is very dull. Plus the assertion that Cineworld's best ploy for getting the judgement overturned is to tell the Appeal Judges that one of their colleagues (and probably a personal friend) is bent and deliberately ruled perversely in Cineplex's favour because she and her husband happen to know some Cineplex executives hopefully isn't Cineworld's preferred option.

@Hexam Yes, the posts today have been particularly poor.
There are the tedious "lol it's dead and worth nothing I told you so" which I don't know why anyone bothers posting but I guess it makes them feel good about their own mistakes elsewhere.
Then there are the stupendously ignorant which don't understand or differentiate between:
- a company hiring lawyers and turnaround specialists for contingency purposes;
- the various types of insolvency procedures and what they mean for the company, customers, creditors and equity owners; and
- the rules around when a listed company is required to make a statement.

Gems include:
- the assertion that Cineworld as no assets and the landlords would make them strip the buildings out and chuck all the fixtures and fittings in a skip;
- that when there is a rights issue the value of the company remains the same but the number of shares increases causing pure dilution (err the company gets cash in return for the rights issue)
- that cinemas will be shut down willy nilly
- the pecking order of creditors and the assumption that the owners of the business have zero say in the future direction
etc etc

Good to hear from you KTP.
IIRC you decided you had had enough at around 30p and cut your losses.
On days like this you look like Warren Buffett!
All the best, and I agree with you regarding the Cine Board, they need to face the music, not for being caught out by Covid, but by not being transparent or perhaps only being transparent to a select few.

Something here doesn't ring true.
It may well be that Cineworld have engaged the various experts as has been reported by the WSJ, but that would be a precautionary measure. I simply don't understand how they can release an RNS 48 hours ago that says "The Group's business operations are expected to remain unaffected by these efforts and Cineworld expects to continue to meet its ongoing business counterparty obligations." with the disclosure that they would file for bankruptcy two days later. Also why not ask the shareholders for a cash injection?
In the US a Chapter 11 (which was mooted in the press reports) basically puts the situation on ice and lets a company have some time to manage a restructure. It may be that a debt for equity swap with the current creditors couldn't be agreed on terms that the BoD could swallow and that they are putting in place a contingency to look at other avenues.
All in all, given that the SP has fallen to rock bottom, althoough I wouldn't put any more money in, it would seem foolish to sell at these levels given the degree of uncertainty.
Maybe this post will age like fine milk, but I don't think that this is the end of the saga just yet.
The one main caveat here is that stockholders and management are NOT aligned and it is entirely possible that the deal is being structured to shaft private investors and allow management an earn out later on to get their investment back.

@email.
A company owns a house worth £1000, there are 100 shareholders all with one share theoretically worth a £10 each so 1% of the company.
Company calls a scrip div worth £1 or 10% extra for every share owned.
Everyone takes it up.
Afterwards the Company still has just a house worth £1,000 and everyone has 11 shares out of 110 shares in issue which is still 1% of the company. All that's happened is that the shares have been inflated.

His other posts suggest he is a teenager with no financial acumen or understanding. Currently losing his shirt on Westminster Group PLC. Clown - filtered.

Berenberg Bank issued a "Hold" notice at 85p even after the court case had come thorough (17-Jan-22).

I still think that a whole load of natural investors in Cine are sitting on their hands awaiting the Appeal verdict - it's too risky for institutions to invest in at the moment, plus being out of the FTSE350 doesn't help.

If/ when that changes this will move fast & big.

And not only the metals market. K2 & Associates (a hedge fund based in Toronto) who magically took out a short in Cine between the ending of the Toronto based court hearings and the publication of the verdict have previously been guilty of manipulating stock prices. Cine is very illiquid compared to other shares so I suspect that there is a lot going on behind the scenes that us "bag holders" will never hear about. The only way to beat the system is to take the very long view, however painful that may feel in the short term.

https://www.theglobeandmail.com/business/article-toronto-hedge-fund-k2-fined-1-million-for-manipulative-trading/

Plus the original judgement would act as precedent for future cases and so there is a public interest in getting this right, as it could materially impact the future of Canada as a place to list if it makes takeovers harder or less attractive.

I doubt that Barbara's 'novel' approach will be allowed to stand and thus become part of the corpus of Canada's corporate law, since it is perverse.