Cineworld Share Discussion Threads

[hpcg] 09/8/2023 15:13

Privileged - with the protracted admin process I would anticipate that the new company will be trading soon and the final agreements signed off by the courts pronto. So spread bets will only be a the closing price for a short while until it is unequivocal the equity is worth 0. Then they will be moved to 0 and the margin released. Again, with the process a long way in cash will be released rapidly.

(I closed my shorts in the autumn last year on the first drop below 2p - but never thought it would take this long to go to nothing.)

[jaknife] 09/8/2023 14:58

Werethereisawill,

"JakNife
I have certainly learned something from this : shorting should become ILLIGAl or at least curtailed
Ok take care everyone!
Happy Xmas !"

Why?

Can you articulate how you think the outcome for Cineworld would have been different in a world without shorting? Other than there being no incentive for me to have posted here and thus you would never have "met" me I can't think of a single thing!


PWhite73

Who is suggesting "financial malfeasance"? I was suggesting financial recklessness and incompetence.

Perhaps "malfeasance" might be the right way to describe the way in which the directors kept shareholders in the dark from May 2022 until August 2022? From May 2022 they were in discussions with the banks because the directors/banks had already established that Cineworld wasn't going to meet the bank covenant test due on 30th June. And it's probably malfeasance that the directors had shareholders approve the accounts at the AGM on 12 May 2023 because the comments in those accounts about "going concern" and the forthcoming bank covenant test were undoubtedly wholly inaccurate.

JakNife

[pwhite73] 09/8/2023 14:21

The Texas Court Judge Marvin Isgur granted Chapter 11. The court doesn't rubber stamp C11 it looks into the circumstances leading up to it. If the court feels that financial malfeasance was at play it can refuse C11 protection from the creditors.

Gone

[werethereisawill] 09/8/2023 14:20

JakNife
I have certainly learned something from this : shorting should become ILLIGAl or at least curtailed .
Ok take care everyone!
Happy Xmas !

[pwhite73] 09/8/2023 14:09

Henchard - Its one of economic of scale. When the pandemic hit smaller cinema chains and smaller businesses in general were able to ride out the storm whilst the big boys collapsed. During the financial crisis of 2008 all the big UK banks fell over and had to be bailed out by the British taxpayer. RBS, Lloyds, HBOS, NatWest etc. The smaller banks managed to survive. Barclays would have collapsed as well if it hadn't done an illegal deal with a Qatar investment fund.

Its just unfortunate Cineworld went on a spending spree just before Covid hit but there was nothing intrinsically wrong with buying Regal and other US cinema chains.

Really must dash.

[henchard] 09/8/2023 14:03

PWhite - one last question it would be good to have your thoughts on: How were Everyman and other cinema groups that survived the pandemic able to manage it?

[pwhite73] 09/8/2023 13:59

There was nothing wrong with the criteria the banks used to loan Cineworld money. Only the people at the very top of banks can sign off billions of pounds worth of loans. What I'm saying is that Covid the once in a century pandemic left Cineworld in a position it could not service its debts and the C11 judge said so himself. He did not blame overleveraging or bad business deals as the reason for the collapse of Cineworld.

Shorters who claim they saw the collapse of Cineworld coming are liars. I am getting too angry. I have to leave this thread now.

[henchard] 09/8/2023 13:53

Are you saying lenders shouldn't have loaned CINE as much money as they did?

[pwhite73] 09/8/2023 13:50

Henchard - "CINE was overleveraged."

Leveraging does not take place in a vacuum it is a two way street. Neither an individual or a business can overleverage themselves. What happens is that the lender does due diligence and decides to loan you the money based on your ability to service the debt over a period of time. If your circumstances change for the worse only then can you be overleveraged.

You can only be overleveraged from the get go if the lender is reckless. If you're earning £40k per year and the bank gives you an overdraft of £5000 and you use it there's no issue with that. If the bank gives you an overdraft of £5 million and you use it then there is an issue because on earnings of £40k per year you cannot service the interest on a £5 million overdraft. This is what happened to Cineworld as a result of the Covid it couldn't service the interest on its debts.

That Cineworld was heading for the rocks anyway is complete garbage.

[henchard] 09/8/2023 13:30

CINE was overleveraged. If gearing had been at a prudent, rather than reckless level, and it had asked equity investors to support it with a modest placing or rights issue, it wouldn't have had a problem getting through the pandemic. Everyman (LSE: EMAN) got through it perfectly ok.

[millennialinvestor] 09/8/2023 13:28

LOL

PWhite is out of control as JakNife delivers blow after blow to her head.

[jaknife] 09/8/2023 13:18

Dear oh dear, some people have learnt nothing from Cineworld's collapse.

[cambridge130] 09/8/2023 12:38

You've just driven a coach and horses through the hole in pwhite's argument JakNife.

[monte1] 09/8/2023 09:01

Re-engineering events to match ones rather blinkered narrative is rarely a sound basis to learn for the future.

[williamcooper104] 09/8/2023 08:43

CNK survived covid

[pwhite73] 09/8/2023 08:42

I said I wouldn't post here again but one or two points need clarifying. Shorting like every other investment strategy is not full proof. No investment strategy actually works or everybody would be adopting it so nullifying its effect. If you make money by shorting or going long you do so by chance. In the investment world the only winners are those that can move markets and prices in their desired direction or those who trade with insider information.

What destroyed Cineworld is not the leveraging undertaken by Mooky but the two years of Covid. Had Covid not happened with the slew of blockbusters released Cineworld may have been the largest and most profitable cinema chain in the world.

When Cineworld filed for C11 nobody knew the outcome, not even Cineworld that's why it took eleven months to complete an operation they said would take only five months.

[privileged] 09/8/2023 08:28

Surely spread bet accounts should be closed at 0p and not held indefinitely at 0.4p. Anyone else finding this?

[jaknife] 08/8/2023 22:48

Werethereisawil,

"The Law should favour the business man who create wealth and employment not the speculators !"

I couldn't agree more.

But the point is that Mooky Greidinger was himself a speculator rather than a traditional business man. Instead of seeking to constantly improve the product he relied upon financial engineering to build his cinema group and that was ultimately his downfall. Mooky massively over-leveraged the business introducing huge financial risk.

The most grotesque example of this were the 2019 sale and lease-backs, which added to Cineworld's leverage. After already leveraging the balance sheet to acquire Regal, Mooky then added to that with the sale and lease-backs and paid a special dividend to shareholders.

It was obvious that Cineworld had problems in late 2021 but Mooky tried to tough it out with the banks right to the bitter end. At the AGM on 12 May 2022 the directors presented a heavily caveated set of accounts to shareholders that included a base case scenario for the going concern assumption that the directors must have known, at that point in time, the Company was already failing to meet.

Whilst we debated here that it was going to be impossible for Cineworld to meet the June 30th RCF covenant test, Mooky confirmed in his declaration to the court that in May 2022 they were already in discussions with the banks:

"Among other things, as of the second quarter of 2022, the Group could not comply with the net leverage covenant ratio set forth in its revolving credit facility and was unable to pay down the facility. Accordingly, in May 2022, certain lenders under the revolving credit facility retained advisors to engage in discussions with the Group and its advisors."

Declaration re: Declaration of Israel Greidinger, Deputy Chief Executive Officer of Cineworld Group plc, in Support of the Debtors' Chapter 11 Petitions and First Day Motions [docket 19]

Page 14:

Had those discussions started before the AGM on 12th May?

Mooky hid the commencement of bank discussions from shareholders for months. Shortly after 30 June 2022 CINE's IR team happily answered shareholder questions via email confirming that Cineworld weren't in default as they had a 90 day cure period, which of course meant that Cineworld expected to be in default 90 days after 30 June.

Cineworld NEVER RNSd that it expected to fail the 30th June covenants and didn't admit that it was talking to the banks until 17th August:



That's about three months after Cineworld actually started talking to the banks.

And then just five days later they were forced by "media speculation" to admit that they were actually considering Chapter 11:



Mooky is NOT a "business man who created wealth and employment", he's a dangerous speculator that over-leveraged a business and took it to the brink of collapse. Also, in the run up to that, he consistently failed to keep shareholders informed.

I am surprised that any Cineworld shareholders is asking for more laws to protect Mooky!

JakNife

[bbmsionlypostafter mk2] 08/8/2023 20:02

Can I refer you to the last sentence in 16796?

[werethereisawill] 08/8/2023 19:47

The Law should favour the business man who create wealth and employment not the speculators !

[cambridge130] 08/8/2023 18:11

yes, shorters are hated because they challenge the thicko stubborn investors plus the fact they make money while the company loses.

The real enemy in these situations is always the company, yet the Stockholm syndrome "investors" defend the company and attack the shorters.