AMC Entertainment had some good news Monday, as long talks with lenders have resulted in collaborative refinancing transactions that extend up to $2.45 billion in debt maturities from 2026 to 2029 and beyond.
The company called the deals “transformative” and said they’ll strengthen the balance sheet, pave the way for future de-levering, and align its capital structure with the expected industry growth trajectory. Effectively, the moves give AMC “significant incremental financial runway.”
AMC’s finances are much improved as the theatrical market’s having a nice run. But the chain has hefty debt and, given the ups and downs of the exhibition business, big maturities coming due in 2026 was a concern. CEO Adam Aron had assured Wall Street in recent months that negotiations were ongoing and that he was hopeful an agreement would be reached.
The transactions include: $1.2 billion of new secured term loans due 2029 issued in consideration for an open market purchase of Senior Secured Term Loans due 2026, with a potential to extend an additional $800 million of 2026 maturities to 2029. Also, $500 million of 10%/12% Cash/PIK Toggle Second Lien Subordinated Secured Notes due 2026 exchanged into new secured term loans due 2029 or repurchased with proceeds of $414 million new exchangeable notes due 2030.
There’s the opportunity to reduce debt by $464 million through the conversion of exchangeable notes into equity.
AMC CEO Adam Aron thanked lenders for their “unwavering support and commitment.”
“This agreement represents an undeniably strong vote of confidence by our lenders in AMC’s future and provides AMC with the necessary financial flexibility to capitalize on an expected strong industry recovery trajectory.”
Aron added, “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.”
He believes box office challenges of the first half of 2024 are “in the rear-view 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. With today’s announcement we are ever more confident in the future of our business as we will continue to take the necessary actions to best position AMC to thrive in a more favorable environment.”
The stock popped on the refinancing news, up 2.4% at $5.13.