NEW YORK (Reuters) – AMC Entertainment Holdings Inc is exploring raising more capital, also through yet another possible stock sale, to weather the COVID-19 pandemic and capitalize on this week’s rally in its stocks, said people familiar with the issue Thursday. .
The largest movie theater chain in the world, with about 1,000 cinemas around the world, suffered unprecedented turmoil after the pandemic last year forced it to close many locations temporarily, while attendance dropped at the open locations. AMC avoided bankruptcy last summer through a debt restructuring deal with its creditors and private equity firm Silver Lake and a series of other financial transactions in recent months.
AMC said Monday it had raised $ 917 million through equity and debt issues since mid-December. “This means that any discussion of impending bankruptcy for AMC is completely off the table,” Chief Executive Adam Aron said in a statement disclosing the additional funds.
On Wednesday, AMC said it had raised an additional $ 304.8 million by selling stock this week, cashing in on an unprecedented social media-driven rally driven by amateur traders who took hedge funds that had shorted their shares.
On Thursday, the company said Silver Lake and other creditors had decided to convert debt into equity in a transaction expected to reduce AMC’s liabilities by $ 600 million.
AMC is considering trying to raise even more money to further capitalize on the rage in its stocks, the sources said. While its shares fell about 57% on Thursday, wiping out most of the week’s gains, they are still up more than 300% since early January.
AMC said Monday that its “financial runway has been extended well into 2021.” Still, it could use the proceeds of a new capital increase to further reduce its $ 5.5 billion debt stack from late September, according to sources.
The movie theater chain is considering a stock sale while the stock remains high to reap hundreds of millions of dollars, which would give it an extra cushion to navigate the pandemic, the sources said. It is also being considered negotiating more debt-for-equity swaps to reduce the money it owes to creditors, the sources added, asking for anonymity because the matter is confidential.
The AMC did not immediately respond to a request for comment.
The company has not yet made any final decisions on short-term financial transactions, and calculations may change depending on how the stock performs during upcoming trading sessions, the sources said.
AMC is consulting with its creditors and taking other steps as traditionally unpopular stocks have skyrocketed in social media frenzy. GameStop Corp has been at the center of volatile trading.
Trading is turning the markets upside down, providing unexpected opportunities for weakened companies to maintain stock levels and brace themselves for additional challenges posed by the pandemic.
Reporting by Mike Spector and Jessica DiNapoli; Editing by Richard Chang