AMC announces debt agreement to keep theater chain afloat – Variety

AMC Theaters reached a debt agreement on Friday that could help the highly leveraged broadcast chain avoid or at least prevent a liquidity crisis.Under the agreement, Silver Lake Group will purchase $ 100 million in senior notes, in addition to the $ 600 million in convertible bonds it already holds in AMC. The company, the world’s largest theater chain, has said in public documents that it will raise $ 200 million in cash by allowing debt holders to trade their titles at a discount. As part of the transaction, the interest they would receive would be 10% in cash or 12% in additional notes due in 2026.

AMC said renegotiating its debt would help it remain solvent until 2021. The company was hit hard by the coronavirus, which forced it to close its channels, depriving it of income. Even before the pandemic, AMC had accumulated a lot of debt to equip its theaters with luxury seats and buy competitors such as Carmike and Odéon. The company ended 2019 with more than $ 4.75 billion in corporate borrowing. In June, AMC acknowledged that the coronavirus, which forced it to close its more than 1,000 movie theaters and fire or fire 600 employees, could bankrupt him.

Debt renegotiation could clean up its balance sheet and help AMC avoid a Chapter 11 bankruptcy, but the theater chain still faces significant challenges. He is banking on a sufficient drop in coronavirus infection rates so that he can start reopening, and he hopes that the new cleaning and safety measures he has implemented will give consumers the confidence they need to go back to the movies.

Christopher Nolan’s “Tenet” and Disney’s “Mulan” live remake are key elements of this strategy and are expected to open in August. However, many insiders expect that an increase in COVID-19 infections may make this impossible.