NEW YORK (Reuters) – AMC Entertainment Holdings Inc. is exploring higher capital raising, including through another possible sale of shares, to withstand the COVID-19 pandemic and take advantage of this week’s rally in its shares, people said Thursday familiarize yourself with the problem.
The world’s largest cinema chain, with about 1,000 cinemas worldwide, has suffered unprecedented turmoil after last year’s pandemic forced it to temporarily close many places, while the number of those left open low. AMC eliminated bankruptcy through a debt restructuring agreement last summer with creditors and private equity firm Silver Lake, as well as a number of other financial transactions in recent months.
AMC said Monday it had raised $ 917 million since mid-December through equity issues and debt. “This means that any discussion of an imminent bankruptcy for AMC is completely off,” CEO Adam Aron said in a statement accompanying the disclosure of the additional funds.
On Wednesday, AMC said it raised an additional $ 304.8 million by selling shares this week, taking part in an unprecedented social media-driven rally fueled by amateur traders who took out hedge funds. they shortened the actions.
On Thursday, he said Silver Lake and other creditors decided to convert debt holdings into equity into a transaction expected to reduce AMC’s obligations by $ 600 million.
AMC is considering trying to raise more money to further capitalize on the frenzy in its actions, sources said. While its shares fell about 57% on Thursday, erasing most of the week’s earnings, they are still up more than 300% since the beginning of January.
AMC said Monday that “the financial track has been expanded to 2021.” However, it could use the proceeds of a further capital increase to further reduce its $ 5.5 billion debt pile by the end of September, according to sources.
The film chain is considering a stock sale, while its stock remains high to raise hundreds of millions of dollars, which would give it an extra cushion to navigate the pandemic, sources said. Negotiating multiple debt swaps for equity is also being considered to reduce the money it owes to creditors, the sources added, requesting anonymity because the matter is confidential.
AMC did not immediately respond to a request for comment.
The company has not made a final decision on short-term financial transactions, and its calculations may change depending on the performance of its shares in future trading sessions, sources said.
AMC is consulting with its creditors and taking other measures, as unpopular actions have traditionally increased in the frenzy fueled by social media. GameStop Corp was at the center of volatile transactions.
The transaction increases markets and presents unforeseen opportunities for weakened companies to support balance sheets to meet the additional challenges posed by the pandemic.
Reporting by Mike Spector and Jessica DiNapoli; Edited by Richard Chang