AMC Cinema’s Senior Lenders Meet to Discuss Chain’s Debt Options

(Bloomberg) — Senior lenders to AMC Entertainment Holdings Inc., the money-losing theater chain, met by phone Friday to discuss ways to bolster the company’s balance sheet, according to people with knowledge of the matter.

Most Read from Bloomberg

The group is weighing options including making a proposal to AMC about how to tackle the company’s debt, said the people, who asked not to be identified discussing a private meeting. The deliberations are at an early stage and no final decision has been made. A spokesperson for AMC declined to comment.

The lenders have met before, but their discussions have gained urgency given the weak slate of movies expected from Hollywood this year. AMC has about $4.6 billion in long-term debt. The lenders are represented by the law firm of Gibson, Dunn & Crutcher, which didn’t respond to a request for comment.

Movie ticket sales in the US and Canada have remained stubbornly below pre-Covid levels, stalling the recovery of theater chains that were closed during the pandemic. Through last weekend, North American ticket sales were down almost 10% from 2023 levels, according to researcher Comscore Inc.

Earlier this year, AMC rival Cineworld Group, operator of the Regal chain in the US, emerged from bankruptcy. Metropolitan Theaters filed for Chapter 11 late last month.

Read More: Poor Box Office Sends 100-Year-Old Theater Chain Into Bankruptcy

Without a debt restructuring, AMC’s repayment obligations will balloon in 2026, when $3 billion comes due. The Leawood, Kansas-based company took on billions of dollars in debt in recent years to fund an acquisition spree that created the world’s largest cinema chain.

AMC avoided bankruptcy during the pandemic when retail investors bid up its shares, allowing Chief Executive Officer Adam Aron to raise much-needed capital.

The CEO has since courted retail investors, meeting with them for exclusive screenings at theaters, accepting cryptocurrency and selling limited-edition popcorn buckets.

During the pandemic, when so-called meme stocks were soaring, AMC traded as high as $450. It closed Friday at $4.08.

In February, AMC reported fourth-quarter profit that missed analysts’ estimates — underscoring the company’s shaky finances since the pandemic. Earnings before interest, taxes, depreciation and amortization came to $42.5 million, missing the $46.7 million analysts were forecasting.

Higher interest payments increased the company’s cash burn in the period, Bloomberg Intelligence analyst Geetha Ranganathan wrote after the results came out.

As a result of the tough 2023, the board cut Aron’s target pay by 25%, with the CEO acknowledging on a call that it was “not a good year for our shareholders.”

–With assistance from Erin Hudson.

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.