AMC In Discussions To Refinance High-Interest Debt To Clean Up Balance Sheet: Report

AMC Entertainment Holdings, Inc. AMC CEO Adam Aron is walking the talk: Aron announced at the start of the year the company is intent on cleaning up its balance sheet.

What Happened: The theater chain is in advanced talks with multiple parties to restructure its debt, The Wall Street Journal reported Tuesday, citing a person familiar with the matter.

Among the options considered are lowering AMC's interest burden and stretching out maturities of the debt by several years, the report said.

The company is reportedly looking to refinance only some of its bonds that carry a high interest burden.

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Why It's Important: AMC's bonds, which were fairly resilient to the recent financial market sell-off, began losing ground Monday and dropped several points, the WSJ said. This reflected the nervousness of bondholders about the company's business.

The plunge in bond prices could make refinancing more difficult, especially in a rising interest rate environment. The Federal Reserve has signaled that a series of rate hikes may be imminent.

AMC, however, is reportedly confident in clinching a deal that can lower interest burden from what the theater chain is paying now.

As of Sept. 30, 2021, AMC had about $5.5 billion in debt, comprising corporate borrowings of $5.45 billion, other long-term liabilities of $181.4 million and finance lease liabilities of $76.3 million. This was far greater than the cash position of $1.613 billion.

Through the first nine months of 2021, the company was shelling out about 27% of its revenues merely to meet interest obligations.

AMC Price Action: At last check, AMC shares were slipping 4.27% to $15.93. The shares are down 40% year-to-date as opposed to the 1,200% gain they made in 2021 amid the meme-stock frenzy.

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