AMC Cinema Lenders Pitch Debt Extension to Troubled Movie Chain

(Bloomberg) -- A lender group to AMC Entertainment Holdings Inc. advised by Gibson Dunn & Crutcher made a proposal to the movie theater company that would push back its near-term debt maturities, according to people familiar with the matter.

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The proposal comes as AMC, the world’s largest cinema chain, owes about $4.5 billion in long-term debt as of Dec. 31, including more than $2.8 billion of maturities in 2026, according to regulatory filings.

Extending payment on the 2026 debt is a key component of the discussions for the company and some of its creditors, said the people, who asked not to be identified discussing a private matter. Its 2026 debt is largely comprised of a $1.9 billion term loan due in April and roughly $969 million of second-lien notes due in June, regulatory documents show.

A group of first-lien lenders held a call in March with advisers to discuss ways to bolster the company’s balance sheet.

Related: AMC Cinema’s Senior Lenders Meet to Discuss Chain’s Debt Options

Wachtell Lipton Rosen & Katz is advising a group of certain second-lien creditors, people familiar with the matter said.

A representative with the company declined to comment, while messages left with Gibson Dunn and with Wachtell were not returned.

AMC disclosed in a regulatory filings on April 19 that it had entered into a new letter of credit after terminating a $225 million revolving credit facility that was set to expire on April 22. The theater chain paid off outstanding amounts under the facility.

In March, AMC said it would sell up to $250 million worth of shares via an at-the-market issuance. S&P Global Ratings in February issued a CCC+ junk designation on AMC with a negative outlook, reflecting “its substantial debt burden” and expectations that revenue will fall 8% to 9% because of a limited slate of film releases from Hollywood studios this year.

Movie ticket sales in the US and Canada have remained stubbornly below pre-Covid levels, stalling the recovery of theater chains that were closed during the pandemic. Regal owner Cineworld Group, the world’s second largest cinema chain, emerged from bankruptcy last year, while Metropolitan Theatres, a 100-year-old chain based in California, filed for bankruptcy in March.

AMC avoided Chapter 11 during the pandemic when retail investors bid up its shares, allowing Chief Executive Officer Adam Aron to raise much-needed capital.

In February, AMC reported fourth-quarter profit that missed analysts’ estimates — underscoring the company’s shaky finances since the pandemic. Earnings before interest, taxes, depreciation and amortization came to $42.5 million, missing the $46.7 million analysts were forecasting. Higher interest payments also increased the company’s cash burn in the period. The board cut Aron’s target pay by 25% this year after AMC lost 85% of its value in 2023.

At the time, the chain said it had $884 million of cash as of Dec. 31. It warned that its cash burn trajectory was not sustainable in the long-term and that operating revenues would need to increase to levels in line with pre-COVID 19 operating levels.

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