(Bloomberg) — Theater chain, AMC Entertainment Holdings, Inc. it is seeking to tame its debt load by having the holders of subordinated bonds to accept a haircut stiff of the existing debt as it throws a doubt about its ability to repay the loans in the future.
The company, hit by the corona virus of the pandemic that has suffered in theatres across the country, and offers a swap that would require investors to take cuts, about 50% of the value of the existing debt, according to a regulatory filing Wednesday. The swap of targets, the four subordinated notes, which are below all other debts in line for the refund. The three-dollar-denominated bonds are trading at deeply distressed levels, in the range of 26 to 27 cents on the dollar, according to Trace data.
BECAUSE this will also cast doubt on its ability to continue operations in a “reasonable time” and has said that he has trouble paying its debt as the Covid-19 pandemic, greenhouse, entertainment, recreation, and business units. He does not like, and expect to continue to dividend payments and said that he will seek federal assistance under the Cares Act.
The firm is asking investors to take a haircut ranging from 47 to 51 cents on the dollar, according to the issuance of bonds, and when investors turn to in their titles. Investors receive new 12% second-priority senior secured notes due in 2026 in the amount that it may pay interest in cash or payment in kind through additional debt.
The start of the application deadline, with more favourable conditions for investors, at 5 p.m. in the city of New York, on the 16th of June. The application deadline is 11:59 hours 30 June.
BECAUSE it is the largest movie theater chain in the U. s. and Europe, with about 1,000 theaters and 11,000 screens across the world, according to its website. He has been forced to close all of its approximately 600 U.s. locations in March, after the public officials have set limits on public gatherings to prevent the spread of the virus.
If not enough bondholders turn in their notes, the exchange could potentially approximately $ 2.3 billion, or subordinated debt, with $ 1.2 billion in second lien secured debt, Bloomberg Intelligence analyst, Mike Campellone wrote in a report Wednesday.
The exchange, combined with a new bond, the firm was sold in April, could help; BECAUSE the lower is the total debt to nearly us $ 4.7 billion from $ 5.3 billion at the end of the month of March.
“Credit concerns of academic medical center will persist, from our point of view, even if the company is successful in executing balance sheet of manoeuvre, is that it could reduce total debt by $597 million dollars,” Campellone has writing, highlighting, increasing level of leverage, a measure of earnings to debt, and liquidity issues.
The $ 500 million of 10.5% first-lien secured notes AMC-issued in April, at a discount, or 98 cents on the dollar last traded at 88.25 cents on the dollar for a yield, which is about 14%, according to data from Trace.
Lenders to the medical centre tapped lawyers at Gibson, Dunn & Crutcher, to help inform pandemic began to hit the company, as previously reported Bloomberg. The company said on Wednesday that it has suspended its operations at all of its theaters through June, leaving it with little or no income.
The cinema giant has said that it will take an impairment charge of $1.8 billion to $ 2.1 billion for the three months to 31 March, and has warned that it would miss expectations for revenue and net loss.
For More information: medical center sees up to $ 2.1 billion in support, With the theaters will still be closed
The company of the elevation of the burden of the debt and the unavoidable fixed costs means the company’s short term financial flexibility will be severely challenged, such as the feline corona virus spread raises the possibility of a shut down of all theatres, decimating the income of tickets,” Amine Bensaïd, or Bloomberg Intelligence, wrote in a note Wednesday.
(Updates with bond pricing and the context in the set)
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©2020 By The International Monetary Fund, L. P.