AMCTheatres, the world’s largest cinema chain, reached an agreement to restructure a portion of its debt to extend maturity dates by at least three years, the company said Monday.
AMC Theatres is currently saddled with $4.5 billion in debt, including more than $2.8 billion of maturities that were due in 2026. Because of the looming deadline, the company had been weighing debt-extension proposals.
With the new refinancing transactions, AMC will be able to prolong the maturity of approximately $1.6 billion in debt due in 2026 to 2029 and 2030. The cinema chain also plans to steady its balance sheet by arranging for the potential repurchase of up to $800 million of additional existing debt due in 2026, as well as issuing $414 million of new debt due in 2030. AMC also ironed out a deal for the potential repurchase of up to $50 million of debt due in 2025, 2026 and 2027.
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Additionally, AMC Theaters has transferred the leases and property of 175 domestic theaters to Muvico, a newly formed subsidiary created for the purposes of the debt deal. This will allow the movie theater circuit to exchange existing debt for new obligations from these locations.
“Today marks a major milestone for AMC,” the company’s chairman and CEO Adam Aron said in a statement. “Thanks to the unwavering support and commitment from our lenders, we have successfully extended a substantial portion of our 2026 debt maturities to 2029 and 2030. Not only have our lenders agreed to extend our debt maturities but we have also created the potential for significant debt reduction as the industry recovers.”
Aron is bullish about the domestic box office, which is down 17% in 2024 compared with the same period in 2023 and nearly 35% behind 2019. After a terrible start to summer, though, moviegoing seems to be rebounding. June and July releases, such as “Inside Out 2,” “Despicable Me 4,” “A Quiet Place: Day One” and “Twisters,” have provided a needed jolt to the business. Marvel’s “Deadpool & Wolverine,” starring Ryan Reynolds and Hugh Jackman as their comic book alter egos, should continue the trend. The superhero sequel lands on the big screen Friday and looks to deliver one of the biggest debuts of 2024.
“The box office challenges of the first half of 2024 are now in the rear-view mirror. The recovery momentum is back,” Aron said. “We expect strong year-over-year box office growth in the back half of 2024, continuing into 2025 and 2026. With today’s announcement, we are ever more confident in the future of our business as we will continue to take the necessary actions to best position AMC to thrive in a more favorable environment.”
Though the pandemic and last year’s Hollywood strikes exacerbated things, AMC’s debt dilemma is largely self-created. When Aronbecame CEO in 2016, he transformed the company into a global powerhouse, acquiring Carmike Cinemas, London-based Odeon & UCI Cinemas and Nordic Cinema Group. Not all of those deals paid off.
However, the company managed to capitalize on the 2021 “meme stock” frenzy— fueled by young retail investors, many of whom were more interested in sticking it to hedge funds seeking to short-sell the stock than they were in supporting the big screen — which sent the circuit’s stock price to the moon. It miraculously allowed AMC to improve its financial situation and renegotiate its massive debt obligations. Shares subsequently fell back to earth and are currently trading at roughly $5.50.
“Retail shareholders saved AMC,” Aron told PvNew earlier this year. “We said back then we weren’t necessarily trading based on fundamentals. The share price has come down, but [the phenomenon] was good for our company. And there are still millions and millions of retail shareholders who are invested in AMC stock.”
