AMC Theatres intends to lift $500 million in a brand new debt providing, the corporate mentioned on Thursday.
The cinema chain mentioned it plans to make use of the funds for common company functions, together with bettering liquidity. AMC has been hit arduous by the novel coronavirus pandemic, which has pressured the exhibitor to shutter its theaters nationwide and furlough its company workers, together with CEO Adam Aron.
The mixture $500 million price of first-line notes will likely be due 2025. The personal providing is exempt from the registration necessities of the Securities Act of 1933.
Shares of AMC inventory had been up greater than 37% in after-hours buying and selling on Thursday.
“The COVID-19 pandemic has had and will continue to have a significant and adverse impact on our business,” the corporate mentioned in a press release. “We can’t predict when or if our enterprise will return to regular ranges… While we plan to eradicate variable prices and scale back fastened prices to the extent doable, we proceed to incur important money outflows, together with curiosity funds, taxes, essential upkeep capital expenditures, and sure compensation and advantages funds.
“We cannot be certain that we will have access to sufficient liquidity to meet our obligations for the time required to allow our cash generating operations to resume or normalize,” the assertion continued. “We may not be able to obtain additional liquidity and any relief provided by lenders, governmental agencies, and business partners may not be adequate and may include onerous terms.”
As of the top of March, AMC had a money steadiness of $299.eight million, together with borrowings in March 2020 of $215.zero million (the total availability internet of letters of credit score) below its $225.zero million senior secured revolving credit score facility due April 22, 2024.
AMC mentioned that it’s assured present money steadiness is enough to resist a worldwide suspension of operations till a partial reopening in July.
“We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because we have never previously experienced a complete cessation of our operations, and as a consequence, our ability to be predictive is uncertain,” the corporate mentioned. “If we do not recommence operations by such times, we will require additional capital and may also require additional financing if our operations once reopened do not generate the expected revenues. Such additional financing may not be available on favorable terms or at all.”
S&P Global has downgraded its credit standing for AMC from B to CCC-, taking the corporate from “highly speculative” to “default imminent, with little prospect for recovery.”
AMC tallied roughly $5 billion in debt on the finish of 2019 and losses of $149 million — that was after recording a $110 million revenue in 2018. And in the course of the firm’s most up-to-date fourth quarter convention name, AMC CEO Adam Aron mentioned that he and different high executives had agreed to chop their salaries and bonuses for 3 years. That was all earlier than the pandemic shutdown choked its income stream altogether.
Experts and trade insiders have been predicting AMC will file for chapter earlier than all is alleged and achieved.
AMC will depend on the $2 trillion CARES Act for reduction, saying that it intends to hunt any accessible advantages, “including loans, investments or guarantees, and any other such current or future government programs for which it qualifies.”
Based on the corporate’s evaluation of the act, it expects to obtain roughly $19 million in money tax refunds from overpayments and refundable different minimal tax credit, in addition to another tax and social safety advantages.
AMC did say, nonetheless, that even when the COVID-19 pandemic subsides, it will possibly’y assure the enterprise will get well as quickly as different industries, or as rapidly as others exhibitors.
“We imagine, however can’t assure, that the exhibition trade will finally rebound and profit from pent-up social demand for out-of-home…
