AMC Entertainment Holdings Inc
What Happened: AMC shares began perking up after Bloomberg reported that AMC reached an agreement with creditors that included a restructuring of its debt and an asset shift involving its U.S. theaters. People with knowledge of the plans reportedly said AMC will move its U.S. theaters into a different unit of the company to allow it to exchange its existing debt for new obligations backed by those theater locations.
Shortly after the report surfaced, AMC shares were halted as the company put out a press release detailing the refinancing transactions. The company said it will issue $1.2 billion of new secured term loans due 2029 in consideration for an open market purchase of senior secured term loans due 2026. AMC also said it exchanged $500 million of 10%/12% cash/PIK toggle second lien subordinated secured notes due 2026 into new secured term loans due 2029.
AMC will also have the opportunity to reduce debt by $464 million through the conversion of exchangeable notes into equity.
"This transaction represents yet another bold and innovative step that AMC is taking to ensure a successful recovery from the unprecedented box office challenges of the last few years. Not only have our lenders agreed to extend our debt maturities but we have also created the potential for significant debt reduction as the industry recovers," said Adam Aron, chairman and CEO of AMC.
The news comes as AMC continues to battle movie ticket sales trends that remain below pre-pandemic levels. Many believed the COVID-19 pandemic would lead to the undoing of AMC, but the company has stayed afloat in recent years, bolstered by retail support for the movie theater giant.
"The box office challenges of the first half of 2024 are now in the rearview mirror. The recovery momentum is back. We expect strong year-over-year box office growth in the back half of 2024, continuing into 2025 and 2026," Aron said.
AMC shares have showed some signs of life in recent months alongside several other meme stocks following the social media return of GameStop Corp
AMC took advantage of the renewed interest, entering into agreements to issue stock in exchange for notes. The movie theater chain also recently said that it raised approximately $250 million of new equity capital through the sale of 72.5 million shares from an offering it launched in March.
Before Monday's announcement, AMC had $4.5 billion in long-term borrowings. The company also had more than $2.8 billion of maturities due in 2026 as of March 31.
AMC Price Action: AMC shares were halted for pending news at last check. The stock was up 2.4% at $5.13 when it last traded at 1:40 p.m. ET, according to Benzinga Pro.
