Pedestrians pass in front of an AMC movie theater in New York’s Times Square neighborhood.
Photographer: Amir Hamja / Bloomberg
Photographer: Amir Hamja / Bloomberg
Silver Lake Management came out of its shareholding in AMC Entertainment Holdings Inc., generating about $ 113 million after converting bonds into shares and selling the shares as the stock of the cinema chain rose.
The private equity firm converted $ 600 million into 2.95% equity securities at a price of $ 13.51 per share, according to a regulatory document on Friday. It then sold 44.4 million shares for an average price of $ 16.05 during a Reddit-driven rise in the company’s stock, according to Bloomberg calculations. The earnings released on Friday do not include any possible hedging trade-offs.
A Silver Lake representative did not immediately respond to messages requesting comments after normal business hours.
Silver Lake has provided millions of dollars in funding for the troubled theater network in recent months, as it struggled to stay afloat in the midst of the pandemic. The company based in Menlo Park, California, was the majority holder of AMC’s 2026 convertible notes.
Investments in previously risky debt are reaping a lot the gains for some credit investors after day traders helped fuel the sudden increase in shares in companies like AMC. The film company rose 85% on Friday to $ 16 before closing at $ 13.26. Silver Lake sold its equity on Wednesday and received up to $ 24.14 per share, according to the document.
The move effectively wipes out $ 600 million of debt for the troubled theater chain.
Read more: AMC aligns Silver Lake support to cut debt and raise money
AMC, based in Leawood, Kansas, raised new money in recent weeks, while seeking to manage its debt and avoid bankruptcy. Companies in the entertainment and leisure sectors are among the hardest hit by the pandemic, as consumers choose to stay at home or are forced by government closings.