In December last year, an Ontario court awarded Cineplex nearly $1bn in damages after judges ruled against the UK chain. Cineworld is appealing the verdict. Greidinger remains confident that the decision will be overturned.
Cineplex’s legal claim would rank alongside unsecured creditors. With several billion dollars of bank loans, private placement notes and corporate bonds sitting ahead of them, the Canadian firm might not see a dime if Cineworld were forced into bankruptcy.
One rumour doing the rounds among North American investors is that Odeon owner AMC, the world’s biggest chain, may want to buy the Cineplex legal claim.
As a creditor to Cineworld, it could be well placed to either delay or scupper what appears to be the inevitable restructuring of the British company’s debts. “It’s an outlandish suggestion,” says one fund manager.
Yet AMC recently stunned investors with plans to buy a 22pc stake in a gold and silver mining company. “Someone convinced AMC to buy a gold mine – and that is more out there than [buying Cineplex’s claim],” the investor adds.
Mooky turns on the bat signal
The hedge funds betting against Cineworld belittle Greidinger’s faith in “the slate” of new releases, such as this month’s release of The Batman.
“All they want to talk about is the new film slate. [There is] no plan as to how the company will be funded or how to reduce its debt pile,” one hedge fund manager says.
Meanwhile, Greidinger and his fellow board members quietly enjoyed a sharp increase in pay last year. Total compensation shared among Cineworld’s four executive and handful of non-executive directors was $4.8m – a 50pc increase. Cineworld shares, by contrast, roughly halved in 2021.
In response to last year’s pay increase, Greidinger says: “I can say that my pay is not going to increase this year. And this is where I am.”
For now, he still has options on the table. How feasible they are is open to question. He has signalled floating a small slice of the Regal business in the US to raise new capital. A broader equity raise is also on the cards.
Greidinger adds: “Once things are back to normal we might consider – and we’ll of course discuss it – with our shareholders [to raise capital] or any other refinancing options.”
One top 10 Cineworld shareholder signals support for a rights issue if Greidinger can whittle the Cineplex claim down.
“There is no way that they are going to run with this leverage for the next 20 years. If they hadn’t had Cineplex [litigation] they would have raised money [from shareholders] already.
“If Cineplex somehow settles in the $200m to $300m, not the $1bn, they will raise capital and that will be the end of leverage. And that will be them [the Greidingers] accepting that they own less of a more stable business.”
Whether Greidinger will survive remains to be seen. But he retains the support of those shareholders that have not yet sold out.
“He calls it ‘the great comeback’,” one says. “I think there is something in ‘you’ve got to fake it till you make it’.”