It’s hard not be following some sort of news, regarding Cineworld or AMC Theatres this week. Cineworld caused a shareholder revolt over plans (that eventually got accepted) to offer potential pay-outs of over £200m despite their ever-growing debt pile.
AMC Theatres recently announced close to a $1b of finance and liquid, notably using Odeon Cinemas as collateral. Thanks to r/wallstreetbets and the Reddit community attacking Hedge funds for their shorting practices, AMC Theatres managed to see a huge share price increase.
Within 3 days AMC has wiped over $600m of debt
This allowed them to sell even more shares to wipe out over $600m in previous debt owed. A massive figure from a completely unexpected source.
It will further take away pressure in the short term from the company, which as we reported Thursday, its survival is still a “growing concern”. Elsewhere the other titan in the Cinema exhibitor market, Cineworld has seen a minor ripple effect this week.
Investors locked out from the market most likely illegally by trading apps earlier in the week turned their intention to CINE. During Wednesday the shares were the second most shorted stock in the UK.
The Jangho Group Increase Cineworld Holding To 13.3%
However, taking advantage of the all-time low Cineworld share prices currently, Chinese tycoon Liu Zaiwang and his group, The Jangho Group increased its stake to 13.3%.
With a total net worth of £556m, Zaiwang has been quietly making an increase in his holding within Cineworld in the past 12 months. Back in September, Zaiwang increased his stake to 5% and fuelled rumours across the stock market that a takeover was coming.
Mooky May Be Forced To Act
City AM that in order to fend off any sort of threat, Mooky Greidinger the CEO of Cineworld and majority shareholder could be forced to take the company private.
However, the main hindrance of any takeover, is
- a) COVID-19 and no real expectation that even by Summer cinemas will be in a much bigger revenue-generating position
- b) The sheer amount of debt close to $6b that Cineworld currently is stuck with.
It makes the cash flow situation and predicting very difficult.
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