Cash-strapped AMC Entertainment saw its stock surge in premarket trade as the nation’s largest exhibitor is said to be closing in on a debt restructuring that will provide a cash cushion as its theaters remain shuttered.
The shares were up 10.4% at $4.56 premarket but surrendered some gains when trading opened are up about 3% midday. They are off lows of near $2 in April but down from over $7 at the start of the year.
The company has been trying for weeks to get bondholders to agree to swap debt at a discount but only a relatively small percentage had agreed as of June 30, the company said in a SEC filing late Tuesday that extended the deadline again. However, according to the Wall Street Journal, it’s nearing a deal for bondholders to provide a $200 million senior loan and exchange their subordinated debt for new senior debt.
Several holders of senior debt including Apollo had proposed an alternate plan. But the one that’s close to being approved would let Silver Lake, which owns $600 million of AMC debt and has a seat on the board, share in the collateral pledged as part of the restructuring — something the Apollo group, which also includes Davidson Kempner Asset Management and Ares Management, oppposed, the WSJ said.
The layers of debt, from senior to subordinated, determine who is first in line to get paid back in a bankruptcy.
The fresh cash is key with theaters, which closed in March, not set to reopen until July 30 as COVID-19 resurges in areas across the country and studios postponed new releases. AMC, which had significant debt heading into the pandemic following a string of acquisitions, faced a dramatic cash crunch when revenue dried up suddenly.
The shares were up 10.4% at $4.56 premarket but surrendered some gains when trading opened, up about 3% midday.
They are off lows of near $2 in April but down from over $7 at the start of the year.