RE:RE:RE:RE:RE:RE:Personally would have expected a short squeezeLol Wheeloffortune, you make some valid points... And yeah, some CEO are real cheerleaders and poor performers... I haven't followed CGX long enough to know about this CEO specifically. But judging from the SP, I guess it's not the most beautiful track record on the stock market.
At this point, it's a numbers and probability rate...
Scenario 1 - The company manages to cut on the costs sufficiently to not breach the 725M limit and the deal closes at 34.
Scenario 2 - The company doesn't manage to cut on the costs enough and the deal goes belly up... Share price craters to what? 2$ Maybe with a chance to dump at 3$?
Scenario 3 - They do not manage to cut cost sufficently, but Cineworld is still interested in purchasing them and to renegociate a more appropriate price. Hard to put a number on it... But say the debt increased 200M$ from the time of the deal announcement, with 63.5 M shares outstanding, well that's whoping 3.15$ a share... So theorically, that's what Cineworld should reduce from the 34$ offer... But let's be very pessimistic and put it at a 15$/share renegociation.
Well... We have to put probabilities to these scenario's...
I would say Scenario 1 and 3 both have a 25% odd, while scenario 2 as a 50% off of happening... I have a feeling you would put more odds on scenario 2, but hey, we'll have to disagree here...
So, based on 7$ a share:
Scenario 1- 25% chance of making 385% return.
Scenario 2- 50% chance that the SP plunges to 2$ and I lose 71.5% of my investment.
Scenario 3- 25% chance of making a 114% return.
Well, if there was a game at the casino where I could get those odds, I would be there playing 8 hours/day for a living.