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AMC Seizes on Meme Stock Moves to Cut $164 Milllion of Debt

May 15, 2024 | blog

(Bloomberg) — AMC Entertainment Holdings is benefiting from its meme inventory rally to scale back its debt, revisiting a playbook that helped it shore up liquidity in 2021.

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The movie show chain stated in a regulatory submitting that it reached a non-public deal to swap about $164 million of its 10% notes due 2026 for 23.3 million shares of newly-issued inventory. Based on the principal exchanged and accrued curiosity, the brand new inventory had a worth of $7.33 per share. AMC shares closed on Tuesday at $6.85.

AMC, a lot of whose debt trades at distressed costs, has been chipping away at its maturities via different swaps and buybacks. It exchanged round $200 million of the debt for shares final 12 months.

The firm has been struggling as film ticket gross sales stay stubbornly beneath pre-pandemic ranges. A gaggle of lenders made a proposal to the corporate to assist it push again its near-term debt maturities, Bloomberg beforehand reported, and the corporate stated it’s working to increase these obligations.

Read extra: AMC Cinema Lenders Pitch Debt Extension to Troubled Movie Chain

Last week, AMC reported a first-quarter loss as a thinner slate of releases from Hollywood studios following final 12 months’s strikes by writers and actors weighed on earnings. Despite that, Chief Executive Officer Adam Aron insisted on the time that “better times are ahead.”

The firm completed the quarter with $624.2 million in money and equivalents, down from $884.3 million three months earlier. It has round $4.5 billion of long-term borrowings.

On Tuesday, the agency’s 10% bonds noticed an enormous increase, leaping almost 10 cents to 85.7 cents on the greenback.

AMC’s shares have soared in current days, following the return of Keith Gill to social media. Gill rallied Reddit day merchants round GameStop Corp. fairness in early 2021 underneath the moniker “Roaring Kitty,” kicking off a bigger retail investor motion that boosted many consumer-facing companies, together with AMC.

The debt swap despatched shares slumping round 10% in pre-market buying and selling. GameStop shares additionally confirmed indicators of cooling.

Read extra: The Reddit Army Bailout: Desperate Companies Get New Lifelines

During the final rally, the corporate took benefit of its inventory surge to boost a whole lot of tens of millions in recent fairness. Investment agency Silver Lake, one of many firm’s foremost collectors, additionally seized on the chance to transform $600 million of bonds into fairness, earlier than promoting the shares within the open marketplace for a acquire of over $100 million.

AMC’s CEO Aron has stayed engaged with the retail investor base — who name themselves “apes” — since.

–With help from Lynn Doan.

(Updates with further particulars all through.)