AMC Entertainment Holdings (NYSE:AMC) and its lawyers announced last week that they had reworked a debt agreement that would save the company money and put it in a better financial position. However, some lenders are fighting the move, saying it wasn't adequately explained.
Floating the boat
AMC, the largest global movie theater operator, originally signaled signs of trouble in June when theaters had been shut down and the company wasn't taking in any revenue. Even as the economy has started up again, many theaters remain closed; those that are open have limited capacity, which means there's less money coming in per film showing.
The theater company's position is still precarious, and it has issued several rounds of debt to stay solvent. On July 10, it announced an amendment to a debt issuance that was meant to reduce the amount of money owed and delay its maturity. It said that it had the support of 73% of the debt owners.
But according to Bloomberg, AMC's lenders sent the theater operator a notice of default on July 12, saying the company failed to adequately provide details of the debt swap and its permissibility. AMC issued further details about the transaction on July 13, but the lenders, who AMC calls an "ad-hoc group," are not satisfied with the information about the deal and are operating as if the company is still in default. Some of the groups listed on the letter are Apollo Global Management, Ares Management, and Eaton Vance, according to the Bloomberg report.
In its announcement, AMC said that separately, Silver Lake Holdings, which sits on AMC's board, was providing it with $100 million in first-lien debt. The opposing group is looking to modify the deal with Silver Lake and receive better terms for its debt.