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AMC Entertainment received the good news today that, after lengthy discussions with its lenders, a joint refinancing transaction has been finalized to extend up to $2.45 million of debt maturities from 2026 through 2029 and beyond.
The company called the deal “transformative” and said it would strengthen its balance sheet, pave the way for future debt reduction and align its capital structure with the expected industry growth trajectory.
“A significant incremental increase in funding”
AMC’s financial situation has improved significantly as the movie theater market has boomed, but the chain is heavily in debt and the ups and downs of the box office business have raised concerns about a large amount of debt coming due in 2026. CEO Adam Aron has assured Wall Street in recent months that talks are ongoing and that he expects a deal to be reached.
The transaction includes $1.2 billion of new secured term loans due 2029 issued as consideration for the open market purchase of senior secured term loans due 2026, with the option to extend an additional $800 million of the 2026 loan through 2029. In addition, $500 million of 10%/12% cash/PIK toggle second lien subordinated secured notes due 2026 will be exchanged for new secured term loans due 2029 or repurchased with the proceeds of $414 million of new exchangeable notes due 2030.
There is an opportunity to reduce debt by $464 million by converting exchangeable notes into equity.
AMC CEO Adam Aron thanked lenders for their “unwavering support and dedication.”
“This agreement represents an unmistakable and strong expression of confidence from our lenders in AMC’s future and provides AMC with the financial flexibility it needs to take advantage of the industry’s expected strong recovery trajectory.”
Aron added, “This transaction marks another bold, innovative step AMC is taking to ensure our recovery from the unprecedented box office challenges of the past few years. Not only have our lenders agreed to extend our debt maturities, but we have also created the potential to significantly reduce our debt as the industry recovers.”
He said that box office challenges for the first half of 2024 are “now in the past, and recovery momentum is returning. We expect strong year-over-year box office growth in the second half of 2024 and continuing into 2025 and 2026. With today’s announcement, we are more confident than ever about the future of our business and will continue to take the necessary steps to position AMC to thrive in a more favorable environment.”
The stock surged on news of the refinancing, rising 2.4% to $5.13.