Member Info for Wellington99

@Hexam ' That would probably be considerably above the D4E 'minimum' in the eyes of the lenders.'

I agree, they would bite their hand off at that price - with all the interest earned in the DIP process, they would come out nearly whole.

My base case is that they offer at least token amount in equity - a few percent - as the one tactic that the BoD have in such a case is to delay. If they get nothing, why not string it out and make the lenders spend more money on fees and lost opportunity cost of reinvesting the proceeds? There may even be some warrants to compensate for the fact that the sale is happening at a bad time so that if it is worth more than the $6bn of debt there is an element of clawback for the equity.

The offers on the 16th will be rubbish as it's just the first round of bidding.
Everyone will be bargain hunting, no one will bid top dollar - why would you?
However, plenty of shareholders will panic and sell their shares then and plenty of others will not understand what it all means and buy shares thinking that they'll become rich.
It'll take several more rounds of negotiations before the end game becomes clear.
Remember that the market is a system for transferring wealth from the impatient to the patient.
Even eBay only bids on your behalf as much as you need to pay and loads of people wait until the last moment and try to snipe the deal.

@Tegop
That's correct. They are not part of the creditor group.
They can't be because there is not yet an enforceable debt in existence.
There is a contingent liability which may or may not be payable depending on the appeals process.
But that sits at the PLC level.
That's why they are so worried.
If the Chapter 11 process leaves the shareholders of the Chapter 11 businesses AND THOSE SHAREHOLDERS ARE THE PLC AND OTHER GROUP COMPANIES NOT US with little or no equity then the chance of them being paid in full is drastically reduced, as the PLC will only hold the head office and the RoW business which is worth about $300m.
So the $1bn becomes a maximum of $300m and probably less because in a liquidation scenario loads of costs would be incurred and other contingent liabilities would crystallise.
Add on top of that the likelihood of the appeal being won by Cineworld PLC you can see why the Cineplex share price doesn't reflect the size of the award.
For us shareholders we need two things to go our way to get more value out of our shareholding: the Chapter 11 leaving us with some residual value AND the Cineplex claim being defeated.
However, if it looks like the sale process will leave some value with Cineworld PLC then I would expect that would be reflected in Cineplex's share price as well as our own, because it leaves more value for then to chase after in the appeals process.
So if some mega bids start coming in, the smart move would be to own Cineplex and Cineworld, in which case you wouldn't care about the outcome of the appeals process.

Cineplex aren't a party to the Ch11. Their claim sits at the PLC level. They tried to get is registered but it wasn't.
It's the poison pill that prevented refinancing at the PLC level.
Ch11 is effectively a refinancing at the subsidiary level, albeit with most of the cards held by the creditors.

RetailInvestor22
The only one who should be embarrassed is yourself. If you look at the Sale & Purchase Agreement you will see that Cineworld PLC was also a party to the agreement, not just the shell Canadian company. The fact that it is an unsecured debt is irrelevant. It is still enforceable in the English Courts - look up Foreign Judgments (Reciprocal Enforcement) Act 1933. Should the appeal fail, then the mechanism would be for Cineplex to request payment of the debt of $1bn, Cineworld PLC would be unable to pay it, Cineplex would petition the court for a Winding Up Order, which would be gtanted and the Cineworld PLC would be liquidated, which would include the sale of the RoW businesses.

I have repeated said for the shares to be worth something one has to assume that there is at least partial success in the appeal. In which case they would be worth c20p plus whatever comes from the sale/ restructuring of the Ch11 businesses.

The Group is the group of businesses in Chapter 11.
That's the one that they want to keep together.
RoW is worth (net of the debt) about 20p per share.
The Cineplex claim of $1bn would wipe all that out if it had to be paid.
That's why we are at 5p.
And even that price is elevated because lots of Pis are buying the shares as FOMO and they don't understand the structure.

@Wolf *Narrator's voice*

"There was nothing else in ElvisRocks life"

The only way that Vue buy the Company (and Wolf by that I'm assuming you mean the PLC rather than a new HoldCo) is if the price for the subsidiaries gets to over $7bn. Then its cheaper to by the PLC equity, pay off Cineplex and get RoW thrown in.
I'm not saying that $7bn is impossible, but it's a really big ask, and would need two people to really want it for strategic reasons. People do pay extra for control, often a 40% premium to the undisturbed share price, but this is a forced sale of a distressed business.

Thanks @Mr.kioto!
That little conundrum has been bugging me all day!

Given that you must be some kind of financial ninja, what does it mean when over 60 subsidiaries (in multiple jurisdictions) are placed in a Chapter 11 bankruptcy process, with $6.2bn in liabilities, but the current trading is well below where it should be, suggesting that the business is worth considerably less than the debt outstanding and the debtors in possession are forced to run a sales process to find a bidder who will offer more than that, or the creditors will just take the subsidiaries away for nil recompense to the parent company, who happens to be a UK PLC with a $1bn judgement from a Canadian court which is being appealed, because of the novelty used in calculating the damages, and it is unclear how enforceable the Foreign Judgments (Reciprocal Enforcement) Act 1933 is in this case or if there is a legal work around and what happens if they lose the appeal or can't get out of it by legal sleight of hand and the net assets of the PLC consist of the RoW cinemas which are only worth $300bn when the rest of the debt has been deducted?

You can answer in just emojis if that's easier.

Nah, thats the ADR.
You want CNNWQ

Yup - people misinterpreted the news. It just confirmed what we knew that industry players are picking over the bones.
Institutional investors were absent, it was mainly a FOMO rally, but it all helps.

Won't be a takeover and the shareholders will never get near the decision.
Twitter is full of rubbush.

"It is rumoured that a minor UK player is looking to buy some of a competitors assets at distressed prices."
Seems to have been translated to a full takeover at astronomical prices.
Nice to see it rise though!

Yes, but it's all about the price...

Absent a stroke of very good luck, there is a chance of this hitting 40p as previously set out, it just isn't a particularly 'good' chance.
Cineworld PLC has the RoW business in it which is probably worth net USD300m (or 18p a share), plus it may get some crumbs from the disposal of the Chapter 11 businesses say 1% (USD40m) up to 10% (USD400m) - 2p and 20p respectively.
So at the end of the Chapter 11 process you will have Cineworld with anything between USD300m and USD700m of assets still facing an enforceable Canadian judgement of USD1,000m. If it gets out of that, 40p is quite possible. The market appear to think that it's a 10/1 shot. I think it's better than that, but we'll have to wait and see.

@Bonzo888 - Wolf is pretty clued up and probably on the money.
I take the mickey because his is the consensus opinion, and that doesn't help us much.
The consensus is that our equity is only worth 4p at the moment.

Amusingly, Cineplex would be able to pay more than anyone else, because there are synergies of $1bn to be unlocked. The judge told us that. Plus they get to sue for the same $1bn from what's left of the PLC.
Double bubble!
Anyway, I wouldn't be surprised if Mooky jumped ship to the new company and tried to earn his equity back through a management incentive package - that was what Sussman was pushing for in the last call. Remember, Mooky's 20% is held in a vehicle that has got a load of debt against it. So unless he works a miracle and can get the price up to (I dunno say) 50p plus, he might end up with nothing anyway.
Anyone know how much he owes on his stake?
He had to refinance it just as Covid hit.

We keep talking about "Cineworld" generically.
The Ch11 is *just* the US, UK & Irish business.
The UK PLC is not subject to the Ch11, which is the entity that holds the RoW businesses and has the Cineplex judgement against it.
So there will be no dilution at the PLC level because no one will put capital at that level (which is partly why we are in this mess). The restructuring is in the subsidiaries where all the US, UK & Irish ones may be taken away from Cineworld PLC to pay down the debt. It is at that level we may (or may not) receive some value.
Sometimes shareholders get a very small % of the equity or warrants to reflect that the business may be going through a bad patch and is so undervalued. Creditors allow this because it helps speed the process on - the equity has a nuisance value!
Personally, I'd let them take the whole thing in return for writing off the RoW debt to leave the PLC with just the RoW business and the small matter of the Cineplex judgement and appeal process.
I've posted previously about what the likely value of that sort of thing would be: 0p to 40p max.
It's possible that this is a 10 bagger from here or a wipeout.
One has to decide which you think it is and bet accordingly....

Maid sounds like someone is runnng ChatGPT on a ZX81.

What the shares are worth will ultimately come back to the Cineplex judgement.
Cineworld PLC has the RoW business in it which is probably worth net USD300m (or 18p a share), plus it may get some crumbs from the disposal of the Chapter 11 businesses say 1% (USD40m) up to 10% (USD400m) - 2p and 20p respectively.
So at the end of the Chapter 11 process you will have Cineworld with anything between USD300m and USD700m of assets still facing an enforceable Canadian judgement of USD1,000m.
So I think that the range of 0p to 38p is what were are looking at, depending on whether that judgement is overturned, reduced in amount or upheld.