Member Info for Wellington99

@TommyD543
When valuing companies like Cine, which have a highly geared capital structure, you are often best off at looking at Enterprise Value (i.e. Long Term debt plus Equity) as a whole, as both require a return for the use of their capital and so 'share' the Free Cash Flows.
In this case, there is a short term hit to Free Cash Flow as Cine has been closed, but as we all expect, this will bounce back sharpish, perhaps even better than before after cost cutting carried out during lockdown as management tried to preserve cash.
The flip side is that Cine had to take on more debt to get through the last year, which needs servicing (and one would hope) repaying.
This means that although the total Enterprise Value may recover quite rapidly, being the discounted value of expected Free Cash Flows, the share of that value between Equity and Debt has shifted towards Debt.
The TL;DR is that the share price is unlikely to bounce back to the £2 to £3 of 18 months + ago as it's not comparing apples with apples.
More likely (at a guess) is £1.50 to reflect the changed capital structure but a fully open operating business.
£2+ is entirely possible in a couple of years as the debt is paid down and more cash becomes available to reward Equity via dividends.

@Cruis1
c40% premium is the rule of thumb for control over and above the undisturbed share price, but that rule tends to break down for highly volatile shares.

@jg68
It's covered here on page 20 and page 103
https://www.cineworldplc.com/sites/cineworld-plc/files/cineworld-ara-2020-v1.pdf

Can confirm.

@smalltrader - Previously LPD accused me of being FI's sock account when FI posted something, LPD claimed to have blocked him and I reposted it so that LPD would see the post.
When FI accused LPD of having two accounts I naturally copied and pasted the post onto my account with a cheeky sign off.

For the bantz.

Oops that's all a bit embarrassing LPD not only read a previous post wrong he left himself logged in under his smalltrader login :-0 ;-)

#banter ;-)

(Happens to the best of us)
;-)

I think it's because the Fund Managers who invest in UK stocks (such as Cine) tend to be UK based and susceptible to the UK outlook.

I do tire of people trying explain the share price as the result of manipulation by Market Makers. MMs are just trying to make a living by driving volume, and they don't act as a cabal but compete against one another. On the whole, the price is dictated by supply and demand, and when there is very low volume, that price can be very volatile.
We saw that with the rise to £1.20 which I expect was retail driven and then the fall back to the 80s which was down to institutional investors not following suit (due to a herd mentality of Cine not being out of the woods yet) and probably some hedge funds seeing an opportunity to make a killing on a share that had got ahead of itself and thus shorting it.

If you really believe in share manipulation then at least lay it at the door of hedge funds, who are known to have acted in concert behind closed doors.

Except that Mooky in his wisdom agreed to specifically exclude pandemics from the scope of the MAE clause.
I suspect that there was a breech but that the damages payable will be nugatory.
Cineplex should have insisted on a writ of Speciifc Performance to force the transaction through but that ship has sailed.

This is an interesting article on Material Adverse Event clauses and Covid-19 which references the Cineworld/ Cineplex case

https://www.dlapiper.com/en/canada/insights/publications/2021/03/canadian-and-uk-courts-engage-on-covid19-in-mergers-and-acquisitions/

Tl;DR
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.

The ????? at the beginning of my post are supposed to be 4 stars out of a possible 5.

????? The Times
Halfway through this uproariously brainless smash’em-up, a key character muses: “When the improbable happens again and again and again, it’s something more than normal.” The line is a tongue-in-cheek critique of the preposterous progress of the film so far, which has included a multi-vehicular minefield death run, a jungle gunfight, and the sight of a low-flying stealth bomber catching a jet-powered Dodge Charger in midair.

Yet it’s also a reference to something wider in the entire Fast & Furious franchise (now an unlikely nine movies old) and to the essence of a series that has taken more than $6 billion (£4.3 billion) at the global box office, and is only increasing in popularity with each successive and more outlandish instalment. These, if we need reminding, are movies about LA drag racers turned globetrotting super-spies who have been known to chase Russian nuclear submarines across Siberian ice floes (in F&F 8). Improbable? Yes. Repetitive? Certainly. And more than normal? Definitely. Yet they’re also defiantly entertaining.

The tone here is late-era Roger Moore Bond (mostly Octopussy), where the awareness of farce is never far away and even brief moments of sobriety are infused with camp. The movie opens with a flashback to the tragic past of drag racing super-spy hero Dominic Toretto (Vin Diesel, who has slowly morphed into, and acts with the range of, a smooth rubbery CGI testicle). Here we learn that “Dom” has a brother called Jakob (John Cena), and that both were traumatised by a fiery trackside crash that killed their bona-fide racer hero pop, Jack (JD Pardo).

These scenes, set in 1989, are lovingly shot and recall the best bits of Tony Scott’s Days of Thunder, but are still titter-inducing for their cornball machismo and the portrayal of Jack as the Yoda of speedway. “It’s not about being the stronger man, it’s about being the bigger man,” is one of his mystical, and frankly nonsensical, pronouncements, whipped out mere seconds before he’s consumed by a ball of flames. That one started the communal chuckles at my full-house (socially distanced) screening. Why? Because that’s how you watch an F&F movie. On the cusp of giggles. And that’s how the franchise exists: on the cusp of self-parody.
[....}
The climax is an idiotic delight that takes the action and the series, hilariously and very literally, out of this world. A post-credits sequence introduces a fan favourite and sets up both F&F 10 and the idea that this franchise could very well run for ever. Which, on present form, is no bad thing.

Oh yes I agree, it would be nice to get it squared away.
All I meant was that it's another potential drag on the share price which will probably amount to nothing.
BTW - wasn't their some guidance suggesting that it would be settled by the end of June? Or I could be imagining it!

I saw a good article about the Cineplex case, but can't seem to find it again. It was IIRC by a Canadian lawyer.

The long and the short of it is that the action is between Cineplex and Cineworld and although Cineworld are guilty of a breach, there was no loss suffered by Cineplex. The shareholders of Cineplex lost out big time, by Cineplex itself didn't hence unlikely that the settlement will be anything other than a few beans.

Probably analagous to how Spotify and the like share fixed subscriptions with artists/ rights holder based on number of plays and some weighting for what's considered premium content.

Whoever Jordan888 is, they must be pi55ing themselves with laughter at the moment given the amount of interest their throwaway line has generated.

Couple of points - I see that some posters don't understand the difference between Market Capitalisation and Enterprise Value. Yes, you can buy the equity slug of the capital structure for half what Cine paid for Regal, but you also get the cUSD5 billion of debt. The Enterprise Value of Cineworld is probably (back of a cigarette pack) closer to £5 billion.

Secondly, the Greidinger Family Trust owns c 20% of Cineworld and that's a pretty effective poison pill for any hostile takeover attempt. Can't see them selling out at £1.50 when in their minds eye it's worth double that. It also explains the strategy of Cineworld being the acquirer rather than the acquired - Regal was bought using loads of debt and the Cineplex deal would have also been the case. The Greidinger family want to stay in the business and will protect their equity position using debt to further their aims.

I would be delighted to be proved wrong, and a fully funded bid from a solid proposition be unveiled next week. But I doubt it!

The decision is the decision, but in terms of timing, it's quite clear that this was made several days ago, probably last Thursday as the data that they quoted was already out of date, and the current crop makes a delay much less clear cut.

But, hey ho, we are where we are. This has very little to do with Public Health and everything to do with optics, politics and 'public opinion' which has been lassively manipulated by Government scare stories.

Sadly, many more have to die from cancer, heart attacks and suicide to ensure that an order of magnitude smaller don't die with Covid, because the former is just sad, but the latter can be laid at politicians' door.

The whole political-media mash up is a corrupt stinking hell hole.

Anyhow, when they stop playing politics with peoples' lives, Cine will rocket and I can't wait for the shorts to get burnt, big time.

All true.
The issue is that the management of Cineworld have chosen a capital structure that is highly indebted.
Nothing intrinscially wrong with that, except that it makes the equity slice of the whole enterprise value very sensitive to developments.
The downside is that the share price can go up, and alas down, very rapidly, on very little news.
Add to that a smaller than usual free float and the interest of shorters means we have a very volatile ride.
I wouldn't be surprised if we drop into the 70's for a very short period, but at the end of the day, Cine will be like a cork out of a champagne bottle.
I know that this is hard for traders but for us LTH, it's just part of the ride.

I copied and pasted as it was more of a service than anything else.
However that would seem to have been in vain if I am now too 'filtered'.
Odd way to behave but I guess I'll just have to leave LPD to his own onanistic echo chamber.

LPD,
You are missing the focus of the thread.
MoneyP1t has posted regards USA domestic current year growth in box office.
1. Not surprising as much was closed first 4 months of year and limited releases.
2. You state you wouldn't be surprised to see £550 -£600m (that's $775 - $850m) for June, I would be VERY surprised to see that as it would require $680 - $760m in 3 weeks basically from one mega movie release FF9. Big percentage of take is from first weekend/week of a movie so dont expect enough from Cruella, QP2 to bolster FF.
3. 2019 US Domestic for June was $1,149m, industry is at c. 1/12 of that with 8 of 30 days gone.

We are in recovery phase, just starting it and while box office is growing (would be Armageddon if it wasn't considering) we have a way to go yet.

Keep it realistic please.

* I realise I am "green boxed" by LPD but sure the message will get across ;-)