AMC announces amended exchange offers already agreed to by 73%
of Senior Subordinate Noteholders representing almost $1.7 billion
of AMC’s U.S. dollar and U.K. pound denominated debt.
Once closed, through a bond exchange offer and other agreements,
AMC will reduce its debt by between approximately $460 million and
$630 million.
AMC raises $300 million in additional cash from incremental
first lien financing, prior to transaction costs, premiums payable
and original issue discount.
AMC to change maturities on almost $2.3 billion and potentially
up to $2.9 billion of debt to 2026, most of which was maturing in
2024 and 2025 previously.
Interest due for the coming 12 to 18 months on the exchanged
Senior Subordinated Notes to be paid all or in part on an in-kind
basis in 2026, thereby generating a further near-term cash savings
to AMC of between approximately $100 million and $200 million.
AMC preserves ability to consider alternative, superior
proposals from other current or potential AMC stakeholders.
AMC Entertainment Holdings, Inc. (NYSE: AMC) (“AMC” or the
“Company”) announced that it has entered into binding written
agreements with an ad hoc group (“Ad Hoc Group”) of holders of some
73% of its approximately $2.3 billion in Senior Subordinated Notes
to support an amendment launched Friday evening July 10th, 2020, to
an exchange offer currently in the market, which would allow AMC to
restructure a substantial majority of these debt securities on a
consensual basis. The terms and conditions of the exchange offer
were provided in a separate press release Friday. Separately, AMC
has also reached agreement to restructure some $600 million of
convertible notes issued in 2018 to Silver Lake.
Under the terms of the agreements reached with the Ad Hoc Group,
the principal amount of AMC’s total debt would be reduced by
between approximately $460 million and $630 million, depending upon
how many other lenders enter into the exchange who are not part of
the Ad Hoc Group of AMC’s Senior Subordinated Noteholders.
Additionally, AMC’s Senior Subordinated Noteholders have agreed
to invest $200 million in new AMC first lien notes, backstopped by
some entities in the Ad Hoc Group. Those providing this backstop
will receive their pro-rata share of 5 million AMC shares, or 4.6%
of AMC’s outstanding shares, worth $23.0 million at Friday’s market
closing price.
Separately, upon the closing of its private debt exchange,
Silver Lake has agreed to provide AMC with $100 million in
additional cash in the form of incremental first lien
financing,
The $300 million in new funding is prior to deducting
transaction costs, 12% in aggregate cash premiums payable to the
Senior Subordinated Noteholders and 12% in aggregate original issue
discount and arranger fees to Silver Lake.
Further enhancing AMC’s liquidity, cash interest due on the new
exchanged notes for a period of 12 months, and under certain
conditions up to 18 months, will be converted to payment in kind
and will be deferred until 2026. Depending on the final amount of
exchanging debt, and the length of time that cash interest is
deferred, AMC currently expects this will save AMC between
approximately $100 million and $200 million of cash in the
near-term.
The maturity of the new exchanged notes and of the Silver Lake
convertible notes will not occur until 2026. Most of this debt
currently has maturities in 2024 and 2025. The extension of the
Silver Lake notes is especially valuable to AMC as they carry an
interest rate of only 2.95%.
AMC has secured flexibility under the transaction support
agreement with the Ad Hoc Group so that prior to the envisioned
closing, AMC may consider and pursue alternative, superior
proposals from other current or potential AMC stakeholders, subject
to the requirements under those agreements. Silver Lake and parties
in the Ad Hoc Group would have the right to decide whether to
consent to any alternative proposal.
Commenting on the agreements, AMC CEO and President Adam Aron
said, “Today is an important day for AMC as we have reached
agreements that strengthen AMC’s financial position over the long
term. This is one of many steps we have taken since March as we
navigate through these turbulent coronavirus times, including
significantly reducing operating costs and capital expenditures,
working with theatre landlords to abate and defer rents, raising
$500 million of new public debt in April and developing new health
and cleaning protocols with the best global experts to keep our
theatres safe. Now today, AMC can add to that list that upon the
closing of these consensual bond restructurings, we materially will
reduce our debt load, increase our cash and extend our maturities.
This proud company, celebrating AMC’s 100th anniversary this year,
is looking forward to our second hundred years with
enthusiasm.”
Aron added, “AMC will continue to take bold actions to
strengthen the financial position of our company. As the largest
theatre operator in the United States and globally, we also are
eager for the day to come when we can re-open all of our theatres
safely and cleanly, but only when it is wise to do so. As and when
that day comes, we have every intention to delight moviegoers, as
they again get to enjoy a few hours of thought-provoking
entertainment and escape when they visit our theatres and see
movies – in our big seats, with our big sound and on our big
screens.”
For more complete information, see the separate press release
also issued by AMC Friday, July 10, 2020.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the federal securities laws. In many cases, these
forward-looking statements may be identified by the use of words
such as “will,” “may,” “should,” “believes,” “expects,”
“anticipates,” “estimates,” “intends,” “projects,” “goals,”
“objectives,” “targets,” “predicts,” “plans,” “seeks,” and
variations of these words and similar expressions. Any
forward-looking statement speaks only as of the date on which it is
made. These forward-looking statements may include, among other
things, statements related to the exchange offers, the completion
of the transactions contemplated thereby or any alternative
transaction, and statements related to AMC’s current expectations
regarding the performance of its business, financial results,
liquidity and capital resources, and the impact to its business and
financial condition of, and measures being taken in response to,
the COVID-19 virus, and are based on information available at the
time the statements are made and/or management’s good faith belief
as of that time with respect to future events, and are subject to
risks, trends, uncertainties and other facts that could cause
actual performance or results to differ materially from those
expressed in or suggested by the forward-looking statements. These
risks, trends, uncertainties and facts include, but are not limited
to, risks related to: the risk that the exchange offers may not
close, the impact of the COVID-19 virus on AMC, the motion picture
exhibition industry, and the economy in general, including AMC’s
response to the COVID-19 virus related to suspension of operations
at theatres, personnel reductions and other cost-cutting measures
and measures to maintain necessary liquidity and increases in
expenses relating to precautionary measures at AMC’s facilities to
protect the health and well-being of AMC’s customers and employees;
the general volatility of the capital markets and the market price
of AMC’s Class A common stock; motion picture production and
performance; AMC’s lack of control over distributors of films;
increased use of alternative film delivery methods or other forms
of entertainment; general and international economic, political,
regulatory and other risks, including risks related to the United
Kingdom’s exit from the European Union or widespread health
emergencies, or other pandemics or epidemics; risks and
uncertainties relating to AMC’s significant indebtedness, including
AMC’s borrowing capacity under its revolving credit agreement;
AMC’s ability to execute cost cutting and revenue enhancement
initiatives as previously disclosed and in connection with response
to COVID-19; limitations on the availability of capital; AMC’s
ability to refinance its indebtedness on favorable terms;
availability of financing upon favorable terms or at all; risks
relating to impairment losses, including with respect to goodwill
and other intangibles, and theatre and other closure charges; and
other factors discussed in the reports AMC has filed with the SEC.
Should one or more of these risks, trends, uncertainties or facts
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those indicated or
anticipated by the forward-looking statements contained herein.
Accordingly, you are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date they
are made. Forward-looking statements should not be read as a
guarantee of future performance or results and will not necessarily
be accurate indications of the times at, or by, which such
performance or results will be achieved. For a detailed discussion
of risks, trends and uncertainties facing AMC, see the section
entitled “Risk Factors” in the Offering Memorandum, the section
entitled “Risk Factors” in AMC’s Form 10-K for the year ended
December 31, 2019 and Form 10-Q for the three months ended March
31, 2020, each as filed with the SEC, and the risks, trends and
uncertainties identified in its other public filings. AMC does not
intend, and undertakes no duty, to update any information contained
herein to reflect future events or circumstances, except as
required by applicable law.
Important Information
The exchange offer referred to herein is a private offering
pursuant to terms and conditions that will only be offered to
certain eligible investors. This press release is neither an offer
to sell nor the solicitation of an offer to buy any securities in
any exchange offer or any other securities and shall not constitute
an offer, solicitation or sale in any jurisdiction in which, or to
any person to whom, such an offer, solicitation or sale is
unlawful. The securities relating to the exchange offers have not
been, and will not be, registered under the Securities Act of 1993,
as amended (the “Securities Act”) or any state securities laws, or
the securities laws of any other jurisdiction an may not be offered
or sold in the United Stated absent registration or an applicable
exemption from registration requirements. The exchange offers, and
the offering of the securities thereunder, are being made only (1)
to persons reasonably believed to be (A) “qualified institutional
buyers” as defined in Rule 144A under the Securities Act or (B)
institutions where permitted in certain jurisdictions that can
provide certifications and other documentation satisfactory to AMC
that they are “accredited investors” as defined in subparagraphs
(a)(1), (2), (3) or (7) of Rule 501 under the Securities Act, in
each case in a private transaction in reliance upon the exemption
from the registration requirements of the Securities Act provided
by Section 4(a)(2) thereof and (2) outside the United States, to
persons other than “U.S. persons” as defined in Rule 902 under the
Securities Act in offshore transactions in compliance with
Regulation S under the Securities Act.
The exchange offers are being made only pursuant to a private
offering memorandum. This offering memorandum and other documents
relating to the exchange offers will be distributed only to
eligible holders. The exchange offers are not being made to holders
of Existing Subordinated Notes in any jurisdiction in which the
making or acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. The
securities issued pursuant thereto have not been approved or
disapproved by any regulatory authority, nor has any such authority
passed upon the accuracy or adequacy of the offering memorandum.
None party makes any recommendation as to whether holders of
existing securities should participate in the exchange offers.
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INVESTOR RELATIONS: John Merriwether, 866-248-3872
InvestorRelations@amctheatres.com
MEDIA CONTACTS: Ryan Noonan, 913-213-2183
rnoonan@amctheatres.com
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