Cinema chain AMC Entertainment Holdings has announced a planned debt restructuring deal with its bondholders which includes $200 million in new capital and $100 million in new senior notes that will be acquired by the Silver Lake Group.
The $200 million will be made available through a new subordinated debt rights bid to allow holders of AMC's existing subordinated notes to swap their shares at a discount for the company's new debt issuance. The debt exchange offer is aimed at reducing AMC's total debt balance.
The debt overhaul aims to provide cash and time to repay the group's borrowings as it tries to withstand the ill effects of a global health crisis that is shuttering their cinema theaters.
According to a statement, the company is asking holders of existing subordinated notes to swap for new secured second-lien notes due 2026 that would pay interest as 10 percent cash or 12 percent in the form of more notes.
The offer will cover four sets of current notes set to mature in 2024 to 2027, AMC disclosed. Participants will also be eligible to subscribe to a pro-rata share of new 10.5 percent first-line secured notes due 2026 to the tune of $200 million.
AMC stated that renegotiating its debt will help it stay solvent by next year. The coronavirus has hit the company very hard, forcing it to close down its chains and depriving it of revenues.
AMC had accrued a lot of debt even before the pandemic to stock its theaters with elegant seats and acquire rivals like Odeon and Carmike.
AMC ended the 2019 period with corporate borrowings of over $4.75 billion. In June, the cinema group admitted that the coronavirus could force it into bankruptcy, push it to pull the plug on its 1,000-plus movie houses, and render 600 workers jobless.
The debt overhaul agreement, anticipated by Deadline on Thursday, will keep the group operating through spring even in a worst-case situation of all movie houses being closed down, a source with knowledge of the matter divulged, though AMC is currently considering reopening the theaters on July 30.
The plan has the backing of investors who own 73 percent of the principal of current notes, which also represent a majority of the holders of each series of notes, AMC disclosed. The group extended the deal's deadline until July 24.
For many weeks, AMC had been trying to strike out a deal with stakeholders as the company looks to secure cash, manage its over $5 billion debt load and steer clear of a possible bankruptcy. Companies in the leisure and entertainment business are among those badly hurt by federal guidelines to stay at home.
