Member Info for WolfofWarks

'I fully expect the judge to take a far more firmer role in effecting the sale of Cineworld as a whole, as was agreed before Xmas.
I am sure he read the Cineworld lawyers the riot act over Mooky’s comments.
Cineworld filled for chapter 11 bankruptcy and not group. That is whom the judge is seeking the best interests of.
Over next month and a half I expect for a date to be set for the deadline for any interested parties to submit their proposals and a shortlist of the top two or three to go forward until one is approved by the court. IMO'

Ian - as ever you're an absolute classic. Time and time you fail to understand the role of the judge in all this. It's not up to the judge to rule on selling the company. It's up to CW in conjunction with their lenders.

All parts of the group other than the ROW business have been included in the C11. So the US, UK, Ireland and Jersey.

The judge's role in not to look after the best interests of any one party, merely ensure that all claims are heard/taken into account and that no party rules roughshod over the process.

It depends on what form you believe in as to which participant information is contained within a share price.

Plus it doesn’t factor in that markets quite often are irrational.

‘ Guess my Q when expressed another way is the share price may spike as there is a viable business there or may drop on the dilutive impact, views on that?’

Look up the efficient markets hypothesis.

‘ Thanks, Wolf and I agree some creditors will have a larger stake. I am wondering what percentage is the tipping point to allow them to suitably refute other creditors who collectively make also have enough interest to shutdown a less than favourable outcome.

We will see in the business plan on Monday, I guess.’

From the early court action I think the DIP lenders had 53% of the voting power. Not too sure how many more creditors would have come forward since then though but I wouldn’t imagine there would be any material that could swing it back under 50%.

They have different powers and voting right dependent on their class and voting percentage. Which is why the senior lenders often provide the DIP finance in these situations as it puts them at the top of the pile.

There’s basically an orderly queue.

I'm assuming it will end up being a block sale of the C11 subsidiaries which I think would simply move out of the group to the new owners, leaving the ROW structure remaining under the current holding company which could then be re-structured as part of the C11, moved to Newco, re-registered, re-capitalised, etc.

'Wolff, C7 gives the creditors spare popcorn and empty cappuccino mugs as recovery value, with C11 at least the debtors can bully the creditors into something'

Senior lenders would be okay they have first lien on the resultant fire sale.

Hi Jeff - I agree with you. I suspect once the sale is done I can see Cineworld being a Newco with ROW business and a capital raise (giving the dilution) and resultant treasure chest to stark making acquisitions and building the company up again on a more sustainable footing.

It gives Mooky and Co back the original business (which was reported at one point). The only questions would be how much could be achieved by a sale to satisfied senior lenders, what happens to the CP claim and other unsecured creditors, and do the lenders/creditors get a stake in Cineworld V2 as part of the remaining haircut on the debt.

Leaseholders hopefully would be satisfied with new acquirers and alleviate most of those lease commitments from the balance sheet, ROW debt had already been paid off as part of the DIP, so should be relatively debt free.

Well as the company has ran out of cash they will be working on the option that gives them the best and quickest cash outcome unless they believe a stake in a debt free group is worth something or can offer a reasonable medium term profitable exit strategy.

I can’t imagine them wanting to hang around for ten years on the hope that cinema does see some stratospheric growth.

Ri - you’re talking market cap not fundamentals.

Disney has thrown up their streaming offering like a throw up tent, which takes a lot of cash.

I’d argue however that they have the best most sustainable content, especially for families and movie fans. They also have a treasure trove of historic IP that they can spin off into new multi million dollar franchises on a regular basis.

‘ Just listened to the last third of the audio from this weeks status meeting, it quite hard to hear clearly, two things stood out in that final third (I) a cry boy from National Cine Media saying he would come out all guns blazing if they amend their contract (you could hear the judge couldn’t care less) and (II) it is the debtors pejorative to submit the plan they want, the creditors / lenders don’t have to agree, ideal if there is consensus but not a requirement

Let’s hope Mooky is classed as a debtor in this context!’

If the creditors don’t agree chapter 11 becomes 7.

‘ Wolf - i meant 'straight to streaming' for release of high value production movies (sorry not with it today)’

I’d agree with that. I think Disney really only did it to help penetrate the market and the pandemic presented them with a brilliant chance to do so.

How has streaming proven to be a massive failure?

Netflix makes billions of dollars profit every year.

You would basically be buying the debt and sticking it on your balance sheet so there is no immediate tax advantage I can see. Plus any interest received would increase your tax liability. I assume the benefit would be in buying the debt at a significant discount and hoping it got paid or could be sold on for more at later date - think ARB senior notes. I think any profit on this would be taxable as a derivate trade potentially.

It's not the same as buying a company with a juicy loss to use as a tax shield. That said I'm not a tax expert.

It’s the CP claim that baffles me as to why they would want to retain the current plc.

Unless the remainder of the company goes into a new structure.

‘ So mokeys 20% is totally worthless in your view?

Evraz, didn’t follow that one, why did it go tits up? Was that one an abramovich company?’

Not he market has placed a value on it. I just explained why I believe such a market exists.

Evraz share price collapsed once the war started and then the shares went in to suspension once Abramovich was sanctioned.

Because there is a market for PIs who want to a punt. There’s investors who want to average down and hope for the best. We haven’t had a shareholder schedule for a while but I remember at one point Goldman were playing about with swaps.

Similar to Evraz once the **** hit the fan the institutions pretty much bailed.

‘ Judge has had enough of Mooky’s antics. The judge am sure has called Cineworld’s lawyers into his chambers over Mooky’s statement and told them that the whole company will be sold off and this will be on the lines of a takeover. If Mooky down the line wants to start again, he can, but not with Cineworld. IMO

Ian - the judge doesn’t get to decide such things - it’s up to Mooky and the creditors to come up with the plan. Also the RNS specifically mentioned that a takeover is not on the cards.

‘ Mooky wants to keep the Cineworld name, it is his legacy. He also owns 20%. He must ensure that shareholders are also awarded for supporting him. There should be a very polished presentation pack prepared to sell Cineworld and outline the box office recovery and ensure a value for it reflects not just debt liabilities but appropriate profit to earnings projections that reflect an attractive price that will also benefit shareholders.’

And herein lies your problem It’s unlikely any future debt free cash flow made using any conventional valuation methodology will be worth the secured debt levels let alone the total debt held.

Penta - It's worth looking at EBITAl if you want a decent crack at the cash coming in or out.