AMC eyes debt refinancing in 2022: CEO

2 min read
Americas
David Bell

Cinema chain AMC Entertainment Holdings will look to lower its borrowing costs and loosen its covenants after piling on high-cost debt to survive the pandemic, the company's CEO said on Wednesday.

AMC CEO Adam Aron said in a Twitter post that one of the company's 2022 goals is to strengthen its balance sheet.

"In 2020 and early 2021, AMC took on debt at high interest rates to survive," Aron said. "If we can, in 2022 I’d like to refinance some of our debt to reduce our interest expense, push out some debt maturities by several years and loosen covenants."

"There is no guarantee of success, but we will try very hard to get this done," said Aron. "We are always thinking of creative ways to make AMC’s future more secure.”

AMC bonds were the most heavily traded in the US high-yield market on Monday morning as investors digested the news. The company's 10% 2026 second lien PIK toggle notes, rated Ca/CCC–, rose just under a quarter of a point to 99.25 cents on the dollar, according to MarketAxess.

In 2020 AMC warned it may run out of cash during the year but the company has been able to raise liquidity in stock and bond markets and an increase in movie attendance has also bolstered the company's cash position. The company said the release of Marvel & Sony Pictures’ Spiderman: No Way Home movie was the biggest December opening of all time.

AMC was last in the bond market in January 2021 when it raised US$1bn of 2029 unsecured notes at 4.25%.

A rally in the company's share price early in 2021 also allowed the company to reduce leverage by converting some convertible debt into shares.

The company reported US$1.8bn of liquidity at the end of the third quarter of 2021, with net losses in the nine months through to September 30 improving to US$1.135bn, compared with US$3.643bn in the same period in 2020.