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The debt-for-equity moves revealed in a regulatory filing is part of a bid by CEO Adam Aron to shore up his company’s balance sheet.
By Etan Vlessing
Canada Bureau Chief
Mega-exhibitor AMC Theatres completed several stock exchange agreements at the end of 2023 to pay down a looming debt load.
In a securities filing on Tuesday, parent AMC Entertainment Holdings reported it completed a “series of privately negotiated exchange agreements” between Dec. 28 and Dec. 29, 2023 covering in all 3.25 million class A shares in exchange for $22.5 million for a buyback of notes due in 2026.
AMC said the common stock had an implied value of $6.94, or a premium over the closing price of $6.14 on Tuesday on the NYSE. “The company may engage in similar transactions in the future, but is under no obligation to do so,” the company said in the filing.
The unregistered stock swap agreements come as AMC grapples with a heavy debt burden and CEO Adam Aron Aron continues to raise fresh cash, where possible, to run the business. That means successive capital raises to offset the company’s high debt load and its ability to ride out the pandemic and the impact of the disruption in its Hollywood movie calendar due to the dual actors and writers strikes.
AMC has also used at-the-market stock offerings in the past to raise fresh capital. “We will continue to seek equity capital when it appears smart to do so,” Aron told analysts during a Nov. 8, 2023, conference call.
In early 2021, AMC became a popular stock among “meme” traders after the company appeared close to bankruptcy amid the pandemic fallout at movie theater chains. At the time, the stock surge helped the exhibition giant strengthen its financial position and diversify its revenue streams.
But as AMC Theatres negotiates an industrywide recovery in Hollywood box office, shares in parent AMC Entertainment are increasingly trading like those of a more mainstream public company after a reverse stock split last year.
Jan. 3, 9 a.m. PST An earlier version of this story wrongly indicated AMC Theatres raised new cash. The debt-for-equity agreements instead served to reduce debt and strengthen the company’s balance sheet.
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