AMC to raise $500 million in bond sale as it seeks to refinance debt

Movie theater chain AMC Entertainment plans to sell $500 million in bonds in a bid to pay down maturing debt and related fees, the company said Tuesday.

Issuing these senior secured notes, which carry an interest rate of 10.5%, is the next step in CEO Adam Aron’s bid to improve AMC’s financial position.

While the domestic box office has begun to recover, ticket sales remain muted compared to prepandemic levels. Refinancing to push debt maturities out can help AMC save cash and pay down interest on other notes that are due sooner.

This fits the narrative that Aron has been communicating to investors in 2022. At the beginning of the year he said his goal was to “refinance some of our debt to reduce our interest expense, push out some debt maturities by several years and loosen covenants.”

After narrowly avoiding bankruptcy last year, AMC rode the meme stock wave and revitalized its business. Now it must deal with more than $5 billion in debt that it accumulated prior to the pandemic through theater upgrades and acquisitions.

Shares of the company slipped 5% on the news, last trading around $16. AMC’s stock is down more than 40% since January.