NEW YORK (Reuters) – AMC Entertainment Holdings Inc is exploring raising more capital, including through another possible stock sale, to resist the COVID-19 pandemic and take advantage of this week’s rise in its shares, people familiar with the matter said. matter on Thursday.
The world’s largest cinema chain, with about 1,000 cinemas worldwide, has suffered an unprecedented turmoil after last year’s pandemic forced it to temporarily close many locations, while the public declined in those that remained open. AMC avoided bankruptcy through a debt restructuring deal last summer with its creditors and private equity firm Silver Lake, and a series of other financial transactions in recent months.
AMC said on Monday that it has raised $ 917 million since mid-December through equity and debt issues. “This means that any talk of an impending AMC bankruptcy is completely out of the question,” said Chief Executive Adam Aron in a statement accompanying the disclosure of the additional funds.
On Wednesday, AMC said it raised another $ 304.8 million from the sale of shares this week, profiting from an unprecedented recovery driven by social media driven by amateur brokers who hired hedge funds that had sold their shares.
On Thursday, the company said Silver Lake and other creditors decided to convert debt into shares in a transaction that is expected to reduce AMC’s obligations by $ 600 million.
AMC is considering trying to raise even more money to further capitalize on the frenzy in its shares, the sources said. Although 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 on Monday that its “financial trail was extended deeply in 2021”. Still, it could use the proceeds of a new capital increase to further reduce its $ 5.5 billion debt stack at the end of September, according to sources.
The cinema chain is considering a sale of shares while its stock remains high to harvest hundreds of millions of dollars, which would give it an additional cushion to navigate the pandemic, the sources said. Negotiating more debt-for-equity swaps is also being considered to reduce the money owed 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 made no final decision on short-term financial transactions and its calculations may change depending on the performance of its shares in the next trading sessions, the sources said.
AMC is consulting its creditors and taking other steps, as traditionally unpopular actions have soared in a frenzy fueled by social media. GameStop Corp has been at the center of volatile trading.
Trade is improving markets and presenting unforeseen opportunities for weakened companies to strengthen their balance sheets to face the additional challenges caused by the pandemic.
Reporting by Mike Spector and Jessica DiNapoli; Richard Chang edition