Member Info for WolfofWarks

Tegop - the simplest way to put it in perspective is that the whole group is bankrupt, not just those receiving the C11 protection.

So while the ROW doesn't have any debt it's only because it has been taken on by the ad hoc lenders at part of the DIP financing.

I think it depends on whether they expect an income or not. The government now have so many anti BTL policies it makes drawing an income from it very difficult especially if you have borrowing against. You've got:

Reduced tax relief on interest payment
3% stamp duty surcharge
Regulatory cost around EPC and minimum requirements coming in
Regulations this year on fire and carbon monoxide alarms
Now an attack on both dividend income relief ad capital gains allowances
A corp tax rate potentially hitting 25% for those properties wrapped up in a limited company

Then thanks to COVID the government have shown that where necessary they will not even let you evict a non paying tenant.

Tegop - You have to understand how corporate structures work. The Plc is a company which owns subsidiaries that form the group. That group is now split between companies that are covered under the C11 (USA, UK, Ireland, & Jersey) or 'the C11 group' and the subidiaries that aren't - now under ROW holding company. Both of these groups are ultimately owned by the Plc company or 'the ultimate owner' which is what you have an equity stake in.

So when the shares are diluted they are issued at the top Plc company level, so take into account everything underneath, ie C11 group and ROW group. There is no sidelining of the ROW group because it is ultimately owned by the equity that is about to be diluted. It's a parent-sibling relationship.

Hope that makes sense.

Yep good ta.

Watching with interest :)

Big cajones!

'Wow
I know you have probably stated already but what do you think the outcome is likely to be.. I don't believe CW could just fold there is too much potential on the plus side and too many cineama sites that would be left empty I don't believe anybody wants that tbf'

Hi stillanovice - CW will survive as once the debt has gone or been reduced there is a profitable business underneath. I think there will be some assets sold to help clear down the debt and D4E for the rest. I hope something in Newco is given to holders but I think looking at the bids received so far it's probably unlikely.

If you've got a strong stomach I think there's money to be made doing what poor is doing, The rug could be pulled at any moment though.

It might well be in a separate entity but it's still owned by the Plc. The whole assets of the Plc remaining after any sale will be moved to a Newco as part of the D4E. That's not speculative it's how bankruptcies work.

Can you find anywhere that ROW wasn't up for sale other than the fact it's not being included in the C11 - which was for CW's benefit by the way, not the lenders. The same lenders also own the rights to the ROW debt, so while it has been cleared for the purposes of the C11 jurisdictions it's still very much alive for the group as it makes up part of the DIP borrowings. They have a hold over the whole group.

Plus can you point to me where a potential sale is not on the table - from what I can see there is a timetable for bids, auction, etc? The company have said that proposals are being reviewed and no decision has been made. I think they'll be a partial sale and then a D4E relating to the rest.

'Further, in connection with the Marketing Process, the Company has now received non-binding proposals from a number of potential transaction counterparties for some or all of the Group's business. None of these proposals involves an all-cash bid for the entire business. The Company is reviewing such proposals in conjunction with its advisers and key stakeholders and, whilst no decision has been made as to whether to pursue a sale transaction, and the terms of any such transaction remain uncertain, based on the proposals received to date, it is not expected that any sale transaction will provide any recovery for the holders of the Company's equity interests. Any sale transaction for the Group as a whole would not include the sale of the equity interests in Cineworld itself and would therefore not be subject to the rules of the Takeover Code.'

RI - the new holding company transaction has already happened and was to facilitate the ROW DIP debt transaction see docket 46.

The companies in c11 have an automatic stay so the creditors cannot go for them. That does not mean that assets outside c11 cannot be sold.

In a bankruptcy everything is on the table and you would be kidding yourself to think otherwise. The creditors are not going to leave a huge part of the business that is actually profitable just because CW didn’t want the hassle of the complexity of trying to have them included within C11.

Have a look at the opening statement from Israel - the lenders refused almost every request of CW’s for further finance, relief, bringing other lenders in, etc. They are sharks and I wouldn’t be surprised if this is what they actually wanted from the outset.

ROW is the part of the business that they have had the interest in and therefore it is the part of the business most likely to be sold. It doesn’t matter if it’s in the C11 or not. The C11 is a protection against creditors calling their debt in. ROW doesn’t have any.

It’s still an asset of the group though and is still fair game in terms of sale and or D4E. There’s no way in the world the lenders would take a haircut on the debt and let shareholders walk away with ROW.

Reality check needed I think.

Ian - why would the first lien pay off the second lien when they are in a much more advantageous position?

It makes absolutely no sense. Plus you’re still banging on about money being owed to banks. Educate yourself go have a look at the opening day presentation and you will see quite clearly who the ad hoc lenders are and quite obviously that none of them are banks.

Ian - serious question time ..... What do you think the '4' means in D4E?

If you look at docket 46 they put the ROW under one group so they could clear the debt from the DIP and do the legals under one company rather than the individual entities.

Thew group is still ultimately owned by the Plc.

Hi Bullbears - you've had me doubting myself here. The source was docket 46 para 18. Sorry got my sources muddled up but it appears we are both right.

It makes sense though that the CP claim would have an adverse affect.

Warren Buffet has made some decent comments on buy backs in his annual letter to Berkshire Hathaway shareholders.

Hi Bullbears - all the supply chain companies would be getting paid at the moment as that what the DIP finance is for.

If you get the chance read Israel's opening statement to the court - it explains the whole debt situation from the start to finish. In a nutshell the covid financing has such strict terms, liens and covenants attached to it that it made any kind of refinance impossible. This is why $1bn of the DIP money went on refinancing the legacy priming facility. It basically caused a massive log jam in the company being able to do anything that involved the taking on of credit.

Hi Bullbears - it was the legacy financing from the covid period that made a re-financing impossible not the CP claim.

The way these things work is once this plan has been agreed and if payment is made to any of the other parties they receive a dividend cheque. But the company cannot give more important to one firm within a class then any other. So they cannot distinguish the importance of CP amongst say all the studios or concession suppliers within that class.

This is why CP at the outset of this were trying to get their claim removed from the automatic stay and the judge told them to do one.

The claim is an annoyance in the background but CW are unlikely to have to pay anything other than whatever distribution is due to CP form the final unsecured creditor settlement and this will have to be agreed by the ad hoc group who have the controlling vote.

'@Wolf, you sound squarely like Ian. The PE will most likely convert their debt to equity into the Newco and will be itching to sell as soon as they break even.'

Agreed - If I was a betting man I would say in a range of 2-3 years they will have turned the company around either sold for IPOd it.

No the company form a plan with the lenders who then have a vote on it with the other cerditors and then it gets presented to the court and other accepted or thrown back for amendment.

Hi Ian - Goldman Sachs is probably client monies.

I'd be very surprised if one of their funds were holding as they have governance, etc, and are usually risk averse by nature,

Hi Melonhead - the RNS basically told you that the offers they have had were of low quality, none were 'all-cash' and most of the interest was in the ROW business. Therefore they will more than likely have to go for the D4E option with the lenders, who will basically have to take a massive haircut on their debt and therefore are unlikely to agree on anything being given to the equity holders.

While this is not all set in concrete it is 'expected' to happen. I'd say plan for the worse and cross you fingers just in case because I'm sure stranger things have happened.

Bullbears - I think you're attaching too much weight to the CP claim. I think they'll be looking at pennies in the pound with the other unsecured creditors and the claim will fall away all together once the D4E goes through and presumably everything gets spun into a Newco.

This may or may not be interesting but I think there are around 20 lenders in the Ad Hoc group who will own the company going forward. I think they will have their own power struggle for control and who may or may not be interested in being actively involved in the company going forward. I'm not too sure how many lenders were involved in Vue before their proceedings but I believe their are two hedge funds actively involved in the new business.

Bny Mellon and they’re convertible bond are an unsecured creditor. The second largest after cineplex.