AMC announces amended exchange offers already agreed to by 73% of Senior Subordinate Noteholders representing almost $1.7 billion of AMC’s U.S. dollar and U.K. pound denominated debt.
Once closed, through a bond exchange offer and other agreements, AMC will reduce its debt by between approximately $460 million and $630 million.
AMC raises $300 million in additional cash from incremental first lien financing, prior to transaction costs, premiums payable and original issue discount.
AMC to change maturities on almost $2.3 billion and potentially up to $2.9 billion of debt to 2026, most of which was maturing in 2024 and 2025 previously.
Interest due for the coming 12 to 18 months on the exchanged Senior Subordinated Notes to be paid all or in part on an in-kind basis in 2026, thereby generating a further near-term cash savings to AMC of between approximately $100 million and $200 million.
AMC preserves ability to consider alternative, superior proposals from other current or potential AMC stakeholders.
AMC Entertainment Holdings, Inc. (NYSE: AMC) (“AMC” or the “Company”) announced that it has entered into binding written agreements with an ad hoc group (“Ad Hoc Group”) of holders of some 73% of its approximately $2.3 billion in Senior Subordinated Notes to support an amendment launched Friday evening July 10th, 2020, to an exchange offer currently in the market, which would allow AMC to restructure a substantial majority of these debt securities on a consensual basis. The terms and conditions of the exchange offer were provided in a separate press release Friday. Separately, AMC has also reached agreement to restructure some $600 million of convertible notes issued in 2018 to Silver Lake.
Under the terms of the agreements reached with the Ad Hoc Group, the principal amount of AMC’s total debt would be reduced by between approximately $460 million and $630 million, depending upon how many other lenders enter into the exchange who are not part of the Ad Hoc Group of AMC’s Senior Subordinated Noteholders.
Additionally, AMC’s Senior Subordinated Noteholders have agreed to invest $200 million in new AMC first lien notes, backstopped by some entities in the Ad Hoc Group. Those providing this backstop will receive their pro-rata share of 5 million AMC shares, or 4.6% of AMC’s outstanding shares, worth $23.0 million at Friday’s market closing price.
Separately, upon the closing of its private debt exchange, Silver Lake has agreed to provide AMC with $100 million in additional cash in the form of incremental first lien financing,
The $300 million in new funding is prior to deducting transaction costs, 12% in aggregate cash premiums payable to the Senior Subordinated Noteholders and 12% in aggregate original issue discount and arranger fees to Silver Lake.
Further enhancing AMC’s liquidity, cash interest due on the new exchanged notes for a period of 12 months, and under certain conditions up to 18 months, will be converted to payment in kind and will be deferred until 2026. Depending on the final amount of exchanging debt, and the length of time that cash interest is deferred, AMC currently expects this will save AMC between approximately $100 million and $200 million of cash in the near-term.
The maturity of the new exchanged notes and of the Silver Lake convertible notes will not occur until 2026. Most of this debt currently has maturities in 2024 and 2025. The extension of the Silver Lake notes is especially valuable to AMC as they carry an interest rate of only 2.95%.
AMC has secured flexibility under the transaction support agreement with the Ad Hoc Group so that prior to the envisioned closing, AMC may consider and pursue alternative, superior proposals from other current or potential AMC stakeholders, subject to the requirements under those agreements. Silver Lake and parties in the Ad Hoc Group would have the right to decide whether to consent to any alternative proposal.
Commenting on the agreements, AMC CEO and President Adam Aron said, “Today is an important day for AMC as we have reached agreements that strengthen AMC’s financial position over the long term. This is one of many steps we have taken since March as we navigate through these turbulent coronavirus times, including significantly reducing operating costs and capital expenditures, working with theatre landlords to abate and defer rents, raising $500 million of new public debt in April and developing new health and cleaning protocols with the best global experts to keep our theatres safe. Now today, AMC can add to that list that upon the closing of these consensual bond restructurings, we materially will reduce our debt load, increase our cash and extend our maturities. This proud company, celebrating AMC’s 100th anniversary this year, is looking forward to our second hundred years with enthusiasm.”
Aron added, “AMC will continue to take bold actions to strengthen the financial position of our company. As the largest theatre operator in the United States and globally, we also are eager for the day to come when we can re-open all of our theatres safely and cleanly, but only when it is wise to do so. As and when that day comes, we have every intention to delight moviegoers, as they again get to enjoy a few hours of thought-provoking entertainment and escape when they visit our theatres and see movies – in our big seats, with our big sound and on our big screens.”
For more complete information, see the separate press release also issued by AMC Friday, July 10, 2020.
This press release includes “forward-looking statements” within the meaning of the federal securities laws. In many cases, these forward-looking statements may be identified by the use of words such as “will,” “may,” “should,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “projects,” “goals,” “objectives,” “targets,” “predicts,” “plans,” “seeks,” and variations of these words and similar expressions. Any forward-looking statement speaks only as of the date on which it is made. These forward-looking statements may include, among other things, statements related to the exchange offers, the completion of the transactions contemplated thereby or any alternative transaction, and statements related to AMC’s current expectations regarding the performance of its business, financial results, liquidity and capital resources, and the impact to its business and financial condition of, and measures being taken in response to, the COVID-19 virus, and are based on information available at the time the statements are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks, trends, uncertainties and other facts that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks, trends, uncertainties and facts include, but are not limited to, risks related to: the risk that the exchange offers may not close, the impact of the COVID-19 virus on AMC, the motion picture exhibition industry, and the economy in general, including AMC’s response to the COVID-19 virus related to suspension of operations at theatres, personnel reductions and other cost-cutting measures and measures to maintain necessary liquidity and increases in expenses relating to precautionary measures at AMC’s facilities to protect the health and well-being of AMC’s customers and employees; the general volatility of the capital markets and the market price of AMC’s Class A common stock; motion picture production and performance; AMC’s lack of control over distributors of films; increased use of alternative film delivery methods or other forms of entertainment; general and international economic, political, regulatory and other risks, including risks related to the United Kingdom’s exit from the European Union or widespread health emergencies, or other pandemics or epidemics; risks and uncertainties relating to AMC’s significant indebtedness, including AMC’s borrowing capacity under its revolving credit agreement; AMC’s ability to execute cost cutting and revenue enhancement initiatives as previously disclosed and in connection with response to COVID-19; limitations on the availability of capital; AMC’s ability to refinance its indebtedness on favorable terms; availability of financing upon favorable terms or at all; risks relating to impairment losses, including with respect to goodwill and other intangibles, and theatre and other closure charges; and other factors discussed in the reports AMC has filed with the SEC. Should one or more of these risks, trends, uncertainties or facts materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by the forward-looking statements contained herein. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. For a detailed discussion of risks, trends and uncertainties facing AMC, see the section entitled “Risk Factors” in the Offering Memorandum, the section entitled “Risk Factors” in AMC’s Form 10-K for the year ended December 31, 2019 and Form 10-Q for the three months ended March 31, 2020, each as filed with the SEC, and the risks, trends and uncertainties identified in its other public filings. AMC does not intend, and undertakes no duty, to update any information contained herein to reflect future events or circumstances, except as required by applicable law.
The exchange offer referred to herein is a private offering pursuant to terms and conditions that will only be offered to certain eligible investors. This press release is neither an offer to sell nor the solicitation of an offer to buy any securities in any exchange offer or any other securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which, or to any person to whom, such an offer, solicitation or sale is unlawful. The securities relating to the exchange offers have not been, and will not be, registered under the Securities Act of 1993, as amended (the “Securities Act”) or any state securities laws, or the securities laws of any other jurisdiction an may not be offered or sold in the United Stated absent registration or an applicable exemption from registration requirements. The exchange offers, and the offering of the securities thereunder, are being made only (1) to persons reasonably believed to be (A) “qualified institutional buyers” as defined in Rule 144A under the Securities Act or (B) institutions where permitted in certain jurisdictions that can provide certifications and other documentation satisfactory to AMC that they are “accredited investors” as defined in subparagraphs (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act, in each case in a private transaction in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof and (2) outside the United States, to persons other than “U.S. persons” as defined in Rule 902 under the Securities Act in offshore transactions in compliance with Regulation S under the Securities Act.
The exchange offers are being made only pursuant to a private offering memorandum. This offering memorandum and other documents relating to the exchange offers will be distributed only to eligible holders. The exchange offers are not being made to holders of Existing Subordinated Notes in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. The securities issued pursuant thereto have not been approved or disapproved by any regulatory authority, nor has any such authority passed upon the accuracy or adequacy of the offering memorandum. None party makes any recommendation as to whether holders of existing securities should participate in the exchange offers.