America’s biggest movie theater operator said it issued $100 million in secured debt in a deal with distressed credit and deep value event driven investment firm Mudrick Capital. The first payment is due in July, giving AMC extra liquidity to wait out the pandy. The interest rate on the debt is 15%.
Despite the rather expensive price tag, shares of AMC [$AMC] jumped 33%. They’re still down 58% over the last year, compared with the nearly 14% gain in the S&P 500. AMC and other theater operators have had to sell shares or otherwise raise funding to stay above water in the face of public health directives shutting down their operations or severely restricting occupancy.
In 2020, AMC said it would be out of cash soon if things didn’t change, and might even have to file bankruptcy. The debt was described in a regulatory filing on Tuesday, and Mudrick was already the holder of $100 million of AMC debt, which it will convert to AMC shares. If only Netflix or Disney would step in and buy up the wounded theaters, right?
“AMC believes this is an important step in strengthening the company’s near-term liquidity position as it deals with the consequences of the global coronavirus pandemic,” the company revealed in a statement.