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Lets hope Cineplex lose otherwise could be game over here!!!
I’ve been thinking about this scenario Nickel.
If I’m honest, I don’t think it’s very likely at all. However, I have no legal expertise. But from a common sense perspective, they are asking for the full amount of the sale - but with no sale - I think it is a case of scaremongering from their side.
But again, I simply do not know. The SP hasn’t moved massively today, so the big boys clearly had it priced in or don’t care!
If Cineplex win, the best outcome would be a debt for equity swap but that still be pretty disastrous in terms of the equity. It's going to be very volatile here for sometime i'm afraid after today's update
The risk and reward here is off the chart at the moment but those who want to sleep properly at night will certainly be dumping. No doubt about that
Jay - yes, the reward is that Cineplex pull out / lose and that visitor numbers return to the screens and this trades on a low profit multiple. That doesnt' change the debt dynamic of course but it would then be a very attractive reward setup.
The risk however is wipeout on the equity if they lose the case. If the ftse wasn't up 3% early this morning this would have plummeted. As I said, hairy times ahead until that's resolution
Nickel, did you miss the RNS this morning?
"Cineworld believes that Cineplex's claim, if successful, would be limited to its costs and expenses incurred in relation to the Acquisition and would not be assessed by reference to the consideration that was payable under the Acquisition."
They are not going to be able to bankrupt Cineworld even if they won, if anything Cineworld did the right thing of pulling out of an expensive deal. They waited until they had grounds to quit the deal otherwise they would have done so at the start of Coronavirus. We have less to fear from this than you are making out.
Whilst I have no legal knowledge the idea that cineplex could expect to keep all its assets and carry on as normal plus obtain over 2 billion in the bank seems slightly far fetched to me...also the idea that cineworld could have seen this as a realistic possibility and still pulled the plug on the deal
@M00la
You're spot on M00la. The Cineworld BOD has Cineplex BOD perfectly cornered. Perhaps they knew the proposed acquisition was turning into a very expensive takeover and waited for the perfect storm of unknown to us covenants breaches to be legally sure that by pulling out will not had resorted with not more of the £28millions fee plus costs to settle the matter if and when came knocking on the BOD doors. The share price has pulled back from today high just like the rest of the Footsie 100 shares have. Nothing new other than the retail share holders dumping their mini portfolios in fear of the worst. NOFEAR
Nice try but you won't get your 30p buy in price that way.
A lot of companies debt will now look bigger due to the IFRS 16 change that means all operating leases will be on the balance sheet. Even if there was a rights issue to ease the debt, the share price is currently a third of what it was post covid, so even with any dilution you would likely still be making a gain. And then ofcourse, with the debt now reduced after rights issue the sp target would be raised up, potentially to around £2.50 to £3. Seeing as it was at £3.20 in May 2019 but the debt has been weighing it down since then.
This debt was factored in pre-covid 19 and we have since dropped a costly deal to buy Cineplex that would have added to the debt. The market is well aware of the debt Cineworld has, it's the thing that held Cineworld within the £2.00 - £3.00 range rather than moving much higher, I don't see how you can use that to justify a drop to 30p. When Cinemas reopen and healthy clashflow is resumed which will be soon then Cineworld will have no problem serving the debt and making profit.
They wouldn't do a rights issue now but potentially in the future. Not sure the debt will have increased from covid as much as people think, furlough is paying the entire work forces salary ni and pensions...and most tenants are barely paying any rent to landlords. Obvioulsly it has increased since covid but that is why the sp is 60p and was £1.80 - £1.90 in late Feb.
I'll agree it's a tricky one to pin point. If you had asked me this morning I would have predicted that the share price would rise in the morning to possibly 63p, fall in the afternoon to about 58p and then rise before close to finish about even around 60p. Now it could still happen like that but after seeing how it's feeling comfortable below 60p I have my doubts.
It reminds me though of the time just before it went on it's wild jump to £1 the first time over a matter of a few short days. We were in a nice trading pattern earning some money between 55 - 60p and then some news landed (I forget what now) and it shot up like a rocket. I've made my position known before, I think it will happen again.
Tricky day, instinct said sell AM and take small profit but then I thought hold...more fool me but alot of others are taking a tumble this PM. Cine is just more pronounced, lawsuit hit it too.
Another day tomorrow
Same I’m kicking myself for not selling this morn and buying back in later... Chat on here got me prepared for a bit loss this morn but then when it bounced I got overconfident and stayed in...
I’m new to shares and completely missed the boat April, tipped my toe in may with Dixons shares and made £200 so put my 6k savings back in Dixons in end of the month. June I was up to £8k thinking it was all on the up and up by overstayed my welcome dipping down to £7200.
Dixons was clearly going nowhere despite opening stores and good news kept dropping so sold up while still on a profit.
9th June I jumped into Cine and easyJet surely they are on road for recovery lots of good news announced openings soon? Miles below pre Covid prices, Oops!
I’m pretty much back down to 6k now bailed out of easyJet on a bit of a rebound so limited my losses, made a little on BP in and out, decided to focus on cine can’t half pick em!
I’m currently 5000 shares in cine and stick with it as surely they are gonna bounce back? *crosses fingers*
1140 Shares in Halfords and looks like good news tomorrow *fingers crossed*
1700 in Dixons are seems to yo-yo between 88-93 so make a little bit jumping in out of them.
D1arit,
If you’re new I would advise against trading until you learn how the industry works. Keep your money in a stock you believe in and check back in a years time.
For note, bailing on easyjet before they start flying again was a bad idea. A share that has averaged out at £10-12 for the past few years to currently be sitting at £7 is a steal. Planes will fly again regardless of today’s situation. Things will pull back.
Patience is the key
I stuck to my prediction and sold out at just under 63, bought, sold again, bought again at 57.8...
I got lucky, looks like I got the highs and lows this morning... I didn't have the balls try it again despite it going to 61+ after... I thought it'd stick around 60 but I'm now red. Though I've probably (not calculated it out) made around 8%.... Super risky.