NEW YORK (Reuters) – AMC Entertainment Holdings Inc plans to raise more capital, including through yet another share sale, to weather the COVID-19 pandemic and capitalize on this week’s rally in its stocks, have people familiar with the matter said Thursday. .
The world’s largest movie theater chain, with around 1,000 theaters worldwide, suffered unprecedented unrest after the pandemic last year forced it to temporarily close many venues as attendance plummeted in those that remained open. AMC avoided bankruptcy with a debt restructuring deal last summer with its creditors and private equity firm Silver Lake, and a series of other financial transactions in recent months.
AMC said on Monday it had raised $ 917 million since mid-December through equity and debt issuances. “This means that any discussion of an impending bankruptcy for AMC is completely excluded,” CEO Adam Aron said in a statement accompanying the disclosure of the additional funds.
AMC on Wednesday said it had raised an additional $ 304.8 million by selling shares this week, profiting from an unprecedented social media rally fueled by amateur traders taking hedge funds that had sold their shares short.
On Thursday, he said Silver Lake and other creditors decided to convert the debt to equity in a deal that is expected to reduce AMC’s obligations by $ 600 million.
AMC plans to try to raise even more money to capitalize more on the frenzy of its actions, the sources said. While its shares fell about 57% on Thursday, wiping out most of the week’s gains, they are still up more than 300% since early January.
AMC said on Monday that its “financial trail has been extended to 2021”. Still, he could use the proceeds of a new capital raise to further reduce his $ 5.5 billion debt by the end of September, the sources say.
The movie chain is considering a sell-off of shares as its stock remains high to raise hundreds of millions of dollars, which would give it additional cushion to navigate the pandemic, the sources said. Negotiating more debt-for-equity swaps is also being explored to reduce the money he owes creditors, the sources added, requesting anonymity as the matter is confidential.
AMC did not immediately respond to a request for comment.
The company has not made any final decisions on short-term financial transactions, and its calculations could change depending on how its stock performs in future trading sessions, the sources said.
AMC is consulting with its creditors and taking further action as traditionally unpopular stocks have skyrocketed in social media-fueled frenzies. GameStop Corp has been at the center of trading volatility.
Trade is disrupting markets and providing weakened companies with unanticipated opportunities to strengthen their balance sheets in order to prepare for the additional challenges posed by the pandemic.
Reporting by Mike Spector and Jessica DiNapoli; Editing by Richard Chang