Unique: AMC Leisure explores new capital increase amid inventory surge
© Reuters. An AMC theater is pictured in New York
By Mike Spector and Jessica DiNapoli
NEW YORK (Reuters) – AMC Entertainment (NYSE 🙂 Holdings Inc is considering raising more capital, including through another possible stock sale, to help weather the COVID-19 pandemic and capitalize on this week’s rally in its stocks affair said on Thursday.
The world’s largest chain of cinemas, with around 1,000 cinemas worldwide, suffered unprecedented turmoil after the pandemic last year forced it to temporarily close many venues while admission to cinemas that were still open declined. AMC has held off the bankruptcy through a debt rescheduling agreement with its creditors and private equity firm Silver Lake, as well as a number of other financial transactions in the past few months.
AMC said Monday it had raised $ 917 million through stock and debt issues since mid-December. “This means that any talk of an impending bankruptcy of AMC is completely off the table,” said chairman Adam Aron in a statement on the disclosure of the additional funds.
On Wednesday, AMC announced that it had raised an additional $ 304.8 million by selling shares this week to capitalize on an unprecedented social media rally run by amateur traders raising hedge funds, who cut their stocks.
On Thursday, Silver Lake and other creditors announced it would convert its debt holdings into equity in a transaction that aims to reduce AMC’s liabilities by $ 600 million.
AMC is considering raising even more cash to continue capitalizing on the frenzy of its stocks, the sources said. While stocks fell 57% on Thursday, undoing most of the week’s gains, they are still up more than 300% since early January.
AMC said Monday its “financial runway has been extended to 2021.” Still, it could use the proceeds from a new capital increase to further reduce its $ 5.5 billion debt mountain in late September, the sources said.
The cinema chain is considering selling its shares while its stocks stay high to reap hundreds of millions of dollars, which would give it extra cushion to deal with the pandemic, the sources said. Negotiating more debt-for-equity swaps is also being considered to reduce the money it owes to creditors, the sources added, calling for anonymity as the matter is confidential.
AMC did not immediately respond to a request for comment.
The company has not made final decisions about short-term financial transactions, and its calculations may change based on how its stock performs in upcoming trading sessions.
AMC is consulting with its creditors and taking other steps as traditionally unpopular stocks have risen in the social media fueled madness. GameStop Corp. (NYSE 🙂 was at the center of volatile trading.
The trade revives markets and offers weakened companies unexpected opportunities to prop up their balance sheets in order to prepare for additional challenges posed by the pandemic.
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