AMC Entertainment Holdings Inc. said it is no longer at risk of impending bankruptcy after raising $ 917 million in new funding and continues its battle against the impact of Covid-19 on its theater business.
The Leawood, Kansas-based company raised $ 506 million in equity after securing $ 100 million in additional first-lien debt and converting $ 100 million in second-lien bonds into equity , it said in a statement on Monday. It also said it had issued pledges of new debt totaling $ 411 million by mid-2023.
“Any talk of an impending AMC bankruptcy is off the table,” said Adam Aron, AMC’s chief executive officer.
According to the statement, AMC’s deal is already backed by a combination of bonds and equity that have been issued in recent months. With the new money, AMC has “deeply” extended its financial career to 2021, a timeline where theater chains are waiting for coronavirus vaccines to become widespread and moviegoers to return for blockbuster releases.
AMC estimated it could hold out through July with no increase in attendance and assuming continued concessions from landlords who owed $ 450 million as of December 31, according to a government filing. AMC said it has stopped paying rent on “a significant portion” of its leases and has received reminders.
“Looking ahead, for AMC to be successful in the medium term, we need to vaccinate a large part of the population in the US and abroad,” said Aron in the statement.
The company warned that even with a vaccine and a surge in moviegoers, the virus could worsen or other strains emerge, leaving the use of cash uncertain. Accordingly, AMC said it is looking for potential additional sources of liquidity to pursue in the future.
AMC said late last year that it would need to raise at least $ 750 million to stay in business. Without new money, the available cash would already be used up this month. The company has also spoken to its landlords to amend the terms of certain leases and avoid a potential liquidity crisis.
The latest financing agreement includes a $ 547 million (£ 400 million) loan to its UK subsidiary Odeon Cinemas Group Ltd., which will refinance a £ 100 million revolving facility and provide £ 300 million in liquidity. The transaction requires approval from Silver Lake Management, the majority owner of AMC’s convertible bonds maturing in 2026.
The $ 100 million in first lien debt revenue came from a sale of non-cash bonds due Jan. 15, 2026 to Mudrick Capital Management, AMC said.
Theater chains were hit hard by government-ordered closings during the Covid-19 pandemic. While some venues reopened with limited capacity, many moviegoers were reluctant to attend. The problem was exacerbated by the fact that the studios were delaying key releases that boost ticket sales.
In the filing on Monday, AMC said that fourth-quarter attendance was down 92% in the US and 89% internationally from the same period last year, and that it is burning about $ 124 million in cash monthly.