Member Info for WolfofWarks

If you want to have a look at Cineworld's very own revenue forecast it's docket number 41 in the Kroll site. It's all there up to H1 2023 if I recall correctly.

You can already access the results on the website ...

Hi Wellington - very well explained post. My only beef would be that it's priced to perfection, whereas the current debt holders will be looking for a low ball valuation, or at least something more realistic. For example, and this is only in my opinion, the quality of cinema is rapidly declining (too many annual franchises and lack of originality) and PPV has obviously come to the fore, with big hitters like Star Wars and Lord of the Rings opting for a PPV box set format. This is big dollars moving away from film production and the cinemas. That said it can still be a valuable business with a decent income after a significant reduction in the debt.

After a hard days graft sucking on the corporate nipple I simply don’t have the energy for an evening job.

I’m at work.

The burgers don’t flip themselves you know :)

Poor - those loans have been purchased by the DIP lenders using the financing. Again in the court docs. They are building a position in terms of voting rights for the D4E.

Jeff - it’s in the first line of the c11 RNS. The DIP funding is being put up by the existing funders - it’s all in the RNS. Nothing has changed - it’s all in your mind. The whole process has the objective of facilitating the D4E.

I don’t know what else to say. There’s three RNS from the company telling you it’s happening.

Can you point me to where things have changed and D4E is no longer in the table?

Jeff - Yes I have my opinions but regarding the C11 and D4E nothing is my guesswork, it’s all been laid out. Whether or not folk want to believe it is a completely different matter.

I’s suggest trying to have a sift through some of the pertinent courts docs on the kroll site. They are a bit wordy at times but you can get the general gist.

“ The reality is a debt for equity swap has been proposed numerous times before now. Anyone whom says this is not so, is delusional.
HSBC and Bank of Isreal have constantly rejected this. They do not do debt for equity. It is not in the banking charter and Modus Operandi.”

When? The company would have had to inform the shareholders of this as it’s a measure of last resort.

Jeff - the court haven’t asked them to rethink the terms. They have put the $1bn dollars due for the refinance into escrow (I read it in one of the court documents yesterday). That payment will happen, just not immediately like intended. It’s also what the DIP lenders are receiving a 20% yield as compensation.

Looks guys the situation as I have explained it is all outlined in the RNS and the kroll reports. The company has told you the C11 is happening to facilitate the D4E, they have told you this will result in significant dilution with no guarantee of no wipeout, they have told you the existing lenders are providing the DIP finance and the court docs outline the entire situation as I have explained now several times.

There’s no mention of other lenders, other options, etc, this process now has the objective of passing through the D4E, the question now is whether the lenders will agree to it.

“ I am getting the impression that he is under the impression lenders are sat here thinking CW are f*cked, business model has fallen apart and we need to get our 5bn back asap,,,”

Everything is correct here apart from the ‘asap’ bit. The cinema model at this point in time is broken. You can see this in the budgeted cash flows that have been released in the kroll docs and also the interim results published on the website. You have a look at the competitors operationally and their strife - Vue and AMC.

That doesn’t mean to say there cannot be a recovery - this brings us back to the future valuation via the DCF forecasts that Hexam was explaining yesterday. If this is appealing enough it is the lenders best chance of recovering some or maybe all of their money if this is what their models show them. This is also why they have put the DIP finance in place to give the company some operational breathing space in order to prevent collapse before this is all agreed.

Right I’m off to bed lol ….

The ROW debt is like the left hand paying the right, but they used the DIP facility to do it. So the net debt afterwards hasn’t changed. It’s given the DIP lenders a larger slice of the pie for the D4E transaction.

Btw poor you can’t compare the distressing of a house to a business. The house doesn’t have any future cash flows.

Poor - the scenario is materialising before your very eyes - you just don’t want to see it. This happens all the time in c11, admins, etc.

Mike Ashley has built Frasers Group on it.

Proper investors do not look at today’s SP, only traders. They look for undervalued businesses by modelling the future free cash flows using DCF like Hexam has already explained.

Jeff - I can’t put it any simpler than this for you. This is one of the first lines in the C11 RNS:

“Cineworld Commences Chapter 11 Cases with approximately $1.94 billion in Debtor-in-Possession Financing Commitments to Facilitate a Significant De-Leveraging Transaction and Position Company for Long-Term Growth”

The important bit:

“to Facilitate a Significant De-Leveraging Transaction”

This is the D4E transaction. It is the reason for the C11, hearings, DIP finance. It all has one aim - to push this through.

They are only meeting their current obligations due to the DIP finance which is being provided by the very lenders who stand to benefit from the D4E. Please have a think about this.

Poor - sophisticated investors do not value a company based on SP, they value a company on the value of its future free cash flow. You and many others keep going on about SP and raises but it’s completely irrelevant.

The lenders are owed £5bn. They know they are not going to get this back in the short to medium term. But if they forgo a large portion of what they are owed a much debt reduced CINE without all the interest payments and trading back at pre covid levels may be very profitable. So the question then becomes how much of the company can be given to the lenders to take on that new risk and what would be the best chance of them getting their money back and maybe more.

So for example if the £5bn was 100% wiped and the debt free syme made £300m profit pa, a PE of 10 as a basic example might value the new company at £3bn. In this scenario you would think they would have 100% of Newco and shareholders would get nothing.

So they would be £2bn out of pocket but would enjoy the future growth, possible dividends, etc, in the new company.

It’s job of Mooky now is to balance the debt and the new holding in newco to try and retain as much of the shareholding as possible.

So maybe the lenders could write off £3bn of the debt but have 90% of Newco, etc, etc. These numbers are hypothetical of course. Existing shareholders would have 10% of Newco. In this scenario newco will be worth less though because it has retained £2bn debt and would have interest payments.

Bullbears - they’ve been talking with lenders for years.

The purpose of the C11 is to facilitate the D4E. It’s as simple as that. Read the C11 RNS have a look through some of the court dockets, detail around the DIP financing.

Mate you seriously aren’t understanding this. They are reconstructing the balance sheet. So in turn for a significant reduction in the debt the lenders with be given a significant portion of the company.

The company cannot be given any more money to turn this around, that ship has sailed.

Jeff - who is going to give them further money.

There was £9bn of debt and lease commitments before the DIP. The company is not looking for alternatives it is looking to pursue the D4E.

Hence the c11, court hearings, DIP, etc.

All other avenues failed which is why the company is where it is now.