AMC Entertainment Sells $500 Million in Notes To Refinance Debt

Giant theater chain AMC Entertainment said it’s selling $500 million in bonds to pay down maturing debt and related fees, costs premiums and expenses.

Senior secured notes with an interest rate at 10.5% will be used to pay off debts due in 2025.

AMC’s refinancing was expected. Adam Aron, CEO, said in early January that “If we can, in 2022 I’d like to refinance some of our debt to reduce our interest expense, push out some debt maturities by several years and loosen covenants.”

To survive, the chain was battered by the pandemic, and was on the verge of bankruptcy. It took out debt at high interest rates in 2020, 2021, and 2021. Retail traders provided a surprising cushion, and they began to buy its stock in the early 2021, allowing it to sell shares at a high price. Issuing more stock would have been another way to raise funds but Aron’s hands were tied from subsequent sales by his new shareholder base that who didn’t want him to because of dilution.

Since the worst of Covid, there has been a noticeable but uneven recovery in box office. Instead of using the cash to pay interest on old notes, refinancing to push maturities to AMC can help save money.

In January, the markets were tense and roiled by jitters about interest rates, inflation, and refinancing was difficult. However, trading has slowed in recent sessions.

AMC released preliminary numbers yesterday, stating that revenue rose and net loss was reduced in the fourth quarter. Premarket trading today saw the stock rise 1% and it rose 5%.

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