AMC Nets $917 Million in Financing to Ward Off Bankruptcy
World’s largest movie theater chain buys time with debt and equity deals as it continues to burn cash during the Covid-19 pandemic
The coronavirus pandemic shuttered every single AMC theater for months. But the pandemic isn’t the only thing pushing the company onto financially shaky ground. Photo Illustration: Jacob Reynolds/WSJ (Originally published Nov. 30, 2020)By Alexander Gladstone and Aisha Al-MuslimUpdated Jan. 25, 2021 4:39 pm ET
Shares of AMC Entertainment Holdings Inc. rose almost 26% after the movie theater giant said it signed deals for $917 million in financing to survive the Covid-19 pandemic for months longer without resorting to bankruptcy.
Investment deals signed by the embattled movie theater chain have brought in $411 million in debt financing and $506 million in equity since mid-December as AMC took advantage of equity markets’ robust appetite for risk and a thirst for returns in fixed income that has driven yield on the riskiest junk debt to record lows.
Investors have proven willing to support struggling companies during the pandemic, even those that have been hit hard by social-distancing and travel restrictions, such as theaters, cruise lines and hotels. The rollout of Covid-19 vaccines has given investors incentive to keep beaten-down companies like AMC afloat and help them avoid a costly debt default or bankruptcy, though the sluggish vaccination rollout also poses a risk.
With the deals announced Monday, AMC Chief Executive Adam Aron said the possible bankruptcy filing the company had previously warned about was now “completely off the table.” The company said its financial runway has now been extended deep into 2021 and that while an increase in cinema attendance seems likely, the future course of the coronavirus meant that cash needs remained uncertain.