AMC (American Multiplex Cinema) has unveiled a proposed debt restructuring agreement with its bondholders that includes $200 million in fresh cash and the Silver Lake Group purchasing $100 million in new senior notes.
AMC will provide the $200 million through a rights offering of new subordinated debt to allow holders of AMC’s existing subordinated notes to exchange their securities at a discount for new debt to be issued by the company.
The Silver Lake Group, a private equity firm which already holds $600 million of AMC’s convertible bonds has agreed to purchase $100 million of additional first lien senior notes in exchange for the better repayment terms.
This debt deal aims to ensure the cash-strapped cinema chain to receive a financial lifeline to stay afloat at least until 2021. They have already seen a circuit shut down since mid- March amid the coronavirus pandemic.
“The company views the transaction as highly beneficial to the company and its shareholders. Upon the completion of the transaction, the company would have (i) reduced the principal amount of its total debt liabilities, (ii) extended the maturities of a significant percentage of its outstanding debt, (iii) decreased cash interest expense and (iv) increased its cash and liquidity position to help navigate the on-going COVID-19 pandemic,” AMC wrote in their statement.
Christopher Nolan’;s ‘Tenet’ and DIsney’s live-action remake of ‘Mulan’ are the key parts of the strategy and currently fixed to open in August. However, the surge in the COVID-19 infections might make it impossible.