AMC Entertainment on Friday said it’s drawn up a new debt agreement that the company hopes will help it stay afloat as the novel coronavirus pandemic continues to impact the industry.
The company, which operates the largest theater chain in the country, said it will raise as much as $200 million in cash by allowing certain current debt-holders to exchange their notes at better terms. Under the terms of the deal, the debt-holders will receive interest of 10% in cash or 12% in additional notes due in 2026.
AMC, which has been rocked by the pandemic and massive amounts of debt already on its books, has also restructured some of its debt deals and said in the filing with the Securities and Exchange Commission on Friday that its chief lender, Silver Lake Partners, was buying an additional $100 million in first-lien notes. The private equity firm already holds $600 million of convertible bonds in AMC.
AMC said in its filing that the new debt agreement will be “highly beneficial” as the company tries to free up liquidity to stave off bankruptcy and survive the pandemic.
Last month, AMC reported a net loss of $2.2 billion for the first quarter, which ended March 31.
The cinema chain tallied roughly $5 billion in debt at the end of 2019 and losses of $149 million — that was after recording a $110 million profit in 2018. Even before the pandemic brought Hollywood to its knees, AMC CEO Adam Aron said that he and other top executives had agreed to cut their salaries and bonuses for three years.
In March, AMC was forced to furlough all 600 corporate employees who work out of its Leawood, Kansas, headquarters, including Aron.
AMC, along with all the other theater chains, have been forced to push plans to reopen theaters — which it desperately needs — as Hollywood studios have continued to shuffle the releases of major films like “Tenet” and “Mulan,” which the industry hopes will be able to help revive moviegoing.