AMC launches LME struck with 1L, 2L groups — aims to loop in remaining 1Ls with fee incentives

Max Frumes
+Kartikeya Dar

22 July 2024•2 min read

AMC Entertainment has agreed to a deal with two creditor groups that is intended to extend the vast majority of its debt maturities through 2029 via a drop-down transaction involving 175 theaters and the AMC brand itself.

The multifaceted liability management transaction was agreed to by holders of nearly two-thirds of AMC’s first lien term loan and nearly all of the second lien notes, with a structure in place for all of the first lien term loan and second lien noteholders to participate, according to sources and details of the announcement disclosed in an 8-K today.

The remaining term loan lenders will have a week to opt in to the deal, according to sources. A partial cash, partial PIK fee currently stands as incentive for them to participate, according to a source.

The term loan group advised by Gibson Dunn and PJT Partners was led by a steering committee comprising funds of HBK Capital, H2, Marathon Asset Management, Hudson Bay, Oaktree Capital Management, Diameter Capital, King Street Capital Management, Sixth Street, and Citadel, according to sources. The second lien group advised by Wachtell and Perella Weinberg was led by Mudrick, Discovery and Pentwater Capital, these sources said. AMC was advised by Moelis and Weil Gotshal.

Representatives for Marathon and Diameter declined to comment. Representatives for the company, the advisors and the other funds were not immediately available for comment.

The drop-down transaction involves moving 175 theaters and the AMC brand into an unrestricted subsidiary, Muvico, and then issuing just over $2bn in new term loans and up to $464m of convertible debt (called “exchangeable notes”). What’s more, the Muvico box will have $200m of credit support from Odeon, which houses AMC’s international business, behind the existing $400m of Odeon senior secured notes. The new term loan and exchangeable notes will have priority over any holdout debt at AMC remainco with respect to the collateral in Muvico. The new term loan will come ahead of the exchangeable debt at Muvico in terms of payment priority.

According to the announcement, $1.2bn of the term loan and $414m of the exchangeable notes have already been issued, paying down $1.1bn of the $1.9bn outstanding on the first lien term loan due 2026, as well as combining the incremental term loan to pay down $500m of the second liens at par.

The total amount of the exchangeable notes will be exchangeable into up to approximately 92.6m shares of common stock, with both mandatory and voluntary conversion triggers, according to sources and disclosures.

According to financial disclosures, the 175 theaters dropped down to Muvico have an LTM EBITDA of $176m through 31 March, versus an EBITDA of $156m for the remaining 383 theaters in the current restricted group.

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