AMC Entertainment Holdings Inc AMC reached an agreement with creditors to restructure its debt this week. AMC CEO Adam Aron called it “the biggest news AMC has made in years.”
What To Know: Tuesday on CNBC’s “Squawk Box,” Aron noted that there have been a lot of headlines coming out over the past few months suggesting AMC could have trouble repaying its debt and could even be headed for bankruptcy.
“I’ve been quoted over and over again saying I thought that was inconceivable and that we would be taking steps to assure AMC’s future, and that’s what we did yesterday,” Aron said.
AMC on Monday announced refinancing transactions with lenders to extend its debt maturities and give the company an opportunity to reduce debt through the conversion of exchangeable notes into equity.
AMC will issue $1.2 billion of new secured term loans due 2029 in consideration for an open market purchase of senior secured term loans due 2026. AMC also said it exchanged $500 million of second lien subordinated secured notes due 2026 for new secured term loans due 2029.
“I just can’t even tell you how important it is that we extended our debt maturities from 2026 to 2029. It gives us years and years of breathing room,” Aron said.
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Why It Matters: The refinancing transactions aim to position the company favorably for an eventual box office recovery, which is progressing well, according to Aron.
Although movie ticket sales remain below pre-pandemic levels, the company is seeing notable recovery momentum and now expects “strong” year-over-year box office growth in the back half of 2024, continuing into 2025 and 2026.
“It’s coming at a time when the box office is finally roaring back. Our profitability will rise if, as and when the box office rises. This is all just such a good news story for my company and for our shareholders,” Aron said.
The AMC CEO highlighted upcoming blockbuster films from Walt Disney Co DIS and others, including “Deadpool & Wolverine,” “Joker: Folie à Deux,” “Alien: Romulus,” “Moana 2” and “Mufasa: The Lion King.”
“Deadpool & Wolverine” is set to open this week, Aron said, adding that the company believes it “might be the highest grossing R-rated film in history.”
As you look into 2025 and 2026, there is another Avengers movie, another Star Wars movie, another Avatar movie and another Mission Impossible, he said.
“It’s just staggering,” Aron said. “There are so many good movies coming out and that’s why we are so optimistic about AMC’s future, so bullish about AMC’s future … finally, I think the good times are about to roll.”
AMC Price Action: AMC shares jumped on Monday following the refinancing transactions announcement. Although the stock was down 3.4% to $5.10 at the time of publication Tuesday afternoon, per Benzinga Pro.
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Photo: Paul Sableman from Flickr.
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