Member Info for Wellington99

@b4gpiperinvestor
I can't be bothered to look it up but usually you are right and rent is deducted before EBITDA. But what is odd here is that cinema leases are considered debt under the messed up accounting standards and so may show up (at least in part) as interest cost, and so be excluded.
Anyhow, on an operating basis, when all the noise is removed, the cinema business is and will continue to be very profitable.
I'm now getting tired posting statements of the bleedin' obvious and I think I've had enough of this board.
It was useful for pointing out bits of information that I hadn't seen elsewhere.
Now it's just a forum for ******s to shout "sell now for buttons or you won't have buttons to invest in a third rate failed government outsourcer"
Or "lol its wurth nuffin' lik i alway sed"
Or "cahpter 11 meaqns that all liabilities will go an de goberment will pay up coz shoppin centers or summit innit"

When I post, I always try to add something to the debate. It would be nice if others did so as well.

Even the people who are short this stock ought to appreciate that as private investors we are starved of the information that industry partipants take as granted and what goes around, comes around.

So leave the gloating at home, and if you are short, post why you are short in a genuine way.

The same with longs. At the end of the day, if you are right, you will prosper.

But if you are wrong and missed a vital point that your in your *extensive* due diligence that might be helpful - either short or long.

I never thought it would be possible to write a post in crayon on this board, but Ian, you've proved me wrong.

@pappalazz
Thanks for your condolences, but in the words of Mark Twain "reports of my death have been greatly exaggerated".

The patient is ill, not deceased, even though many on here seem to want to bury Cineworld alive.

@Wibblewobble1
It's not a case of me not liking it, it's a case of your post being utterly financially illiterate.
First of all, there is no reason why Cineworld needs to be debt free, in fact being debt free and all equity funded is very inefficient. This is because the required return on Equity is considerably higher than on (say) Senior Secure Debt (because of the risk profile they face) and so Cineworld would need to create even more profit to pay the providers of the same amount of capital their required return. Apart from that the returns to shareholders come in the form of dividends, which are not tax deductible, unlike interest payments (which are the returns to debt providers) and are tax deductible. This is Corporate Finance 101. Modigliani & Miller came up with a theorem aboutthis that is the bedrock of modern capital allocation theory and it won them a Nobel Prize in 1985!
Secondly, an efficient capital structure will feature a diversity of providers (in increasing levels of risk) starting with secured lines of credit with the bank, leasing agreements with the providers of plant & machinery, landlords who rent or lease premises to companies, Senior Secured Debt, Junior Secured Debt, Senior Unsecured Debt, Senior Subordinated Debt, Junior Subordinated Debt and then Equity and even within the equity class you can have Preferred Equity and Common Equity.
All of the above have different risk profiles, required returns and pluses and minuses in terms of who wants to hold them and what they do for the company.
What we are talking about here is that the equity tranche has (allegedly) been wiped out by losses during Covid so that the high risk (i.e. of not getting paid their return and their capital being at risk) has been assumed by the Secured Debt. Given that they are not being paid for the risk that they are facing they naturally want to either have the full upside and control that an equity shareholding would give them (Debt for Equity Swap) or for another capital provider to step in and provide a buffer between them and any future losses.
Thirdly, ...I can't be bothered to go on.

@Wibblewobble1
Get a better envelope, that's complete tosh.

@ianharding
You are not having a good day, pretty much all wrong again.
The UK version is a CVA and if everyone chips in, then all can walk away with very little damage.
As landlord we were on the reciving end of the Travelodge CVA at the beginning of Covid.
https://www.companyrescue.co.uk/guides-knowledge/news/travelodge-cva-success-story-continues-2914/
We had to take some rent reductions and the shareholders put in some new cash, now Travelodge is a flourishing business again and the shareholders weren't harmed in the long run.
It is possible if the business concerned is just going through a bad patch and needs to write off or restructure some debt, as is the case with Cineworld. It doesn't work when the business model is broken as is the case with Debenhams etc.

@antmoss44 Just filter the tw8t. At this point, Cine is a better bet than Crapita anyway!

@bullsbears
Spot on - too much FUD around. I reckon by December things will be clear, one way or another. If the SP was in the 40s it might be worth getting out now, but at these levels, not to sit it out would be foolish in my view.

@ianharding
I think that you are 99% wrong. They won't swap the whole £5 billion; the equity is worth considerably more than £40million when the restructuring is complete; landlords are unlikely to be part of the transaction; Cineworld will continue trading and the rent will be paid otherwise the business value evaporates; lenders will not lose billions as the business is very valuable once the capital structure is sorted out.

The1% I think you may be right is that the person who leaked to the WSJ had a vested interest, but that they had a short position they wanted to get paid off on, not because they were long. The thing that it has done is made a RI even harder. But it's equally likely it was just some clerk who knew what had been going on and shot their mouth off wanting to feel important.

@ poorinvestor - just filter him.

@ Olpps not a stupid question at all and is actually the most likely scenario. Debt providers don't want to become equity holders, otheriwse that is what they would have done in the first place. If a substantial tranche of debt was converted to equity then that would provide the headroom to service the rest of the debt. There is no reason why Cineworld ought to be all equity funded - it isn't a very efficient capital structure.
How much debt neds to be swapped, at what price and with how much new cash - those are the big questions.

@ latpulldown, do try and read before you post.
You will see that I pointed out that the algos had picked up on something and then posted what it was. They are not my views, I was explaining what was likely driving their behaviour.

Latpulldown is over on the HMSO board, schooling me in his inimitable way - a cretin getting the wrong end of the stick and proving that he is a living example of the Dunnung-Kruger effect.
Every single one of his posts reminds me of the axiom that a fool and his money were lucky to get together in the first place.
Without him this village is truly missing its idiot.

@poorinvestor - I think you are right but for the wrong reasons. Anyhow good luck to us all!

@poorinvestor - did you invest £100k at c3p becaase you think Cineworld is too big to fail?

@poorinvestor As I said, the cineman business and sites (well most of them) won't go under. They will just transfer to new owners. The fight at the moment is who those owners are and in what proportion.
Cineworld isn't RBS.

@WolfofWarks - Thanks. I think that the main point of contention is what current equity holders get versus any 'new' interests. The market is saying it thinks that they will get zero. That may be the case but I think that's overdone. There are many scenarios which would leave current shareholder with a decent interest. I'm not saying that they can trade out of this without new capital, but unlike Debenhams or other businesses that have gone under recently, the cinema business is looking like it will be pretty profitable a year or so out, which means that the delta or cash needed to tide them over isn't that big. Personally I would like to see the BoD quantify how much that is under a range of scenarios and then ask current shareholders if they would be willing to fill that hole to retain the ownership of the business. At 3p I think that the market has overdone it. Just don't ask me what I think it should be, because without better information that's virtually impossible to predict.
@poorinvestor - this didn't happen two years ago because Mooky and co tried to cover that liquidity gap with new debt and the convertible bond, They should have gone for a Rights Issue ages ago but wouldn't because the Greidinger has all of its wealth (and then some - their shares are geared) couldn't come up with any new cash and so would have been diluted down.
Having this run as Mooky's private fiefdom is the root cause of most of the problems (the messed up Cineplex bid with no get out clause, growth at all costs to become No. 1 and far too much debt).

Get rid of the family business mentality and the Greidingers and put in proper Corporate Governance procedures and I think institutions and debt holders might be more amenable to a more balanced restructuring and recapitalisation. Shareholders would still be diluted but not necessarily wiped out.

Blimey there's some idiocy here.
If the creditors do take control then they would very likely get 80%+ or even be made whole, after a fair bit of time and work.
In the event of them forcing an insolvency event the business would be sold as a going concern either as a whole or in part for a few billion to PE, vulture capital, the studios etc, possibly with some of the debt stapled to it and new equity introduced.
The core business (or aleast the vast majority of it) would remin trading and intact.
The people who seem to think that there are forces at work (I'm guessing that they mean the studios or government) who won't let it go down because it's systematically important to the industry or local economies are either high on drugs or conspiracy theorists.
THE CINEWORLD MOVIE SHOWING BUSINESS WILL BE FINE, WHAT IS BEING WORKED OUT IS WHO WILL OWN IT AND IN WHAT PROPORTIONS AFTER THE CURRENT LIQUIDITY CRISIS IS OVER.

Well my filter bin is overflowing today.

I never knew there were so many halfwits who had the time to post "lol this is going bust you will lose all your money sell now"

Lads, if you had done that when it was over a quid, that would be kudos.

But after two RNS announcements which say that that is a possibility, it just makes you look like the bell ends who forced McDonalds to print "Coffee is hot" on their packaging.

Ah. Inflation 'predicted' to hit 18% and bank base rate to rise to 7%.
So a double whammy as borrowing costs increase for HMSO (the debt) and people have less disposable income because they are spending it all on energy and the essentials so footfall and rents will fall as the high street dies yet again.
Six months time things will be very different.