Creditors don't seem very eager to assist movie theater chain AMC Entertainment (NYSE:AMC) in reducing its debt load.
The Wall Street Journal reports some creditors are pushing back against AMC's attempt to reduce its $5.2 billion debt by about $1 billion because it would give investor Silver Lake Group better standing in getting repaid.
Take a step back
The movie theater operator has been teetering on the edge of bankruptcy ever since the COVID-19 pandemic forced the closure of all of its screens.
While it plans to reopen them next month with various social distancing protocols in place, getting to this position has not been easy and AMC was only saved from a bankruptcy filing by a last-minute $500 million lifeline of new debt.
That has only increased the burden on AMC, which is trying to restructure its operations, so it has proposed its unsecured creditors give up their claims to the bonds they hold at a discount and instead agree to take securities valued at between $0.51 and $0.53 on the dollar. The securities would be secondarily backed by AMC's brand name and other assets.
At the same time, AMC investor Silver Lake would get to exchange its convertible bonds into new securities that would have a first priority claim on the theater operator's assets in the event AMC goes under.
Helping put someone ahead of their own claims is not something the other creditors are apparently keen on doing.
There is a big question whether moviegoers will return to theaters in droves when they reopen as Hollywood has also been closed and new movies put on hiatus. Many films that had been scheduled to be released in theaters were instead distributed via streaming services.