As part of a long push to dig itself out of a financial hole triggered by the Covid pandemic, AMC Entertainment announced a multi-pronged agreement with creditors and lenders to reduce its leverage and take out near-term maturities.
First, lenders will provide up to $223 million in fresh cash to help refinance debt maturing in 2026 and provide additional liquidity for the giant exhibitor as the box office recovers.
Some $590 million of existing notes due 2029 will be moved into a new note, also due then, for a total aggregate principal amount $825 million.
Debt holders will also exchange at least $145 million of their holdings into equity, with the potential to equitize up to a total of $337 million of existing debt.
Concurrently, AMC will settle outstanding litigation with the bondholders who sued the company in New York Supreme Court. The agreement will return claims to theaters and other assets that this group of creditors previously held as collateral, but that it claimed had been illegally moved to another rival group of creditors.
The package reflects strong creditor support for AMC’s long-term recovery, the company said, with CEO Adam Aron calling it “yet another important and strategic move, as AMC continues to fortify our financial footing, and improve the trajectory of our post pandemic recovery.”
AMC last inked a deal with lenders a year ago to restructure its debt. The biggest chain in the U.S. and globally entered Covid with a hefty debt load that was a stinging liability given the need to finance it even as theaters shut down and the box office slumped. Hollywood strikes and LA fires followed. The industry has only been looking at its first chance for a strong, sustained recovery starting in the first half of this year.
“Thanks to constructive engagement with our lenders, we’ve achieved a smart outcome that meaningfully strengthens AMC’s balance sheet,” Aron said. “We continue to make positive advances, at a time when we also are riding the powerful wave of a recently resurgent industry-wide box office,” Aron said. “Our full-year industry projections point to the strongest box office performance in five years. We further anticipate more improvement in the domestic industry box office next year too, such that in our view 2026 also will show continued growth and momentum. That’s an extraordinary backdrop for AMC’s ongoing recovery efforts.”
This agreement requires final consent from AMC’s term loan lenders.