AMC Entertainment Holdings Inc is raising more capital, including through another possible share sale, to withstand the COVID-19 pandemic and leverage this week’s progress in its shares, people familiar with the case said Thursday. .
The world’s largest cinema chain, with around 1,000 cinemas worldwide, has experienced unprecedented turmoil after the pandemic last year forced many venues to close temporarily, while attendance at those that remain open fell. AMC averted bankruptcy last summer through a debt restructuring agreement with its creditors and private equity firm Silver Lake, and a series of other financial transactions.
AMC said on Monday it had been raising $ 917 million through stock and debt issues since mid-December. “This means that any talk of an imminent bankruptcy for AMC is completely off the table,” CEO Adam Aron said in a statement with the disclosure of the additional funds.
AMC said on Wednesday that it had raised an additional $ 304.8 million this week by selling shares and creating an unprecedented social media-driven rally driven by amateur traders entering into hedge funds that have shorted its shares.
On Thursday, Silver Lake and other creditors decided to convert debt ownership into equity in a deal that was expected to reduce AMC’s liabilities by $ 600 million.
AMC is considering raising even more money to further exploit the madness in its shares, the sources said. While its shares fell about 57% on Thursday and wiped out most of the week’s gains, it has been rising more than 300% since the beginning of January.
AMC said Monday its “financial runway has been extended to 2021.” According to the sources, it could still use the proceeds of a new capital increase to further reduce its $ 5.5 billion debt pile from the end of September.
The sources are considering a share sale while stocks are still high to raise hundreds of millions of dollars. This will provide the extra pillow to explore the pandemic. The negotiation of more debt-for-stock swaps is also being considered to reduce the money it owes to creditors, the sources added, asking for anonymity because the case is confidential.
AMC did not immediately respond to a request for comment.
The sources said that the company has not made any final decisions on financial transactions in the short term, and its calculation may change depending on how the stock performs in the coming trading sessions.
AMC is consulting with its creditors and taking other steps, as traditionally unpopular stocks have soared through social media. GameStop Corp was the center of volatile trading.
The trade increases markets and provides unforeseen opportunities for weakened companies to sharpen balance sheets to address the challenges posed by the pandemic.
Reporting by Mike Spector and Jessica DiNapoli; Edited by Richard Chang