The most recent transaction that AMC Entertainment has orchestrated is a coda to the masterclass of liability management that continues to create windfalls for certain creditors while mostly continuing to eviscerate retail shareholders.

In the coming weeks, AMC will close a settlement with certain first lien noteholders (the outside deadline in the agreement is 29 August, but 80% of the term loan is already signed up and it has all consents needed to close) to end the final chapter of an LME which it believed it had wrapped up almost exactly one year ago. In that transaction, AMC advised by Weil Gotshal and Moelis pulled out various miraculous moves, extending nearly all of its maturities out through 2029 and beyond via the creation of a second lien convertible and a drop-down transaction involving 175 theaters and the AMC brand itself.

That July 2024 deal netted consent from lenders under AMC’s erstwhile $2bn term loan due 2026, and a particularly clever group of second lien noteholders led by Pentwater and Discovery and advised by Wachtell and Perella Weinberg.

But the deal conspicuously left out first lien noteholders at the time because it seemed their consent wasn’t required. A Paul Weiss-advised group of 7.5% first lien noteholders filed a state court lawsuit in September 2024 against AMC parties with an interesting legal strategy, which ultimately won’t be tested after parties reached this settlement.

The latest deal, which is set to close in August, cut the litigious noteholders in on the dropped assets, but not without some extra goodies for those who devised and led the 2024 deal. 9fin breaks down the winners and the losers now that the final touches are in place of a masterclass of LME.

The winners

The Paul Weiss group: This group holds around $590m out of the $950m outstanding in 7.5% first lien notes due 2029. Holders, led by Deutsche Bank, Carronade and Anchorage, and PSAM as disclosed in the litigation, will provide approximately $223.3m in new money financing with a 5% backstop premium. They will exchange at par their $590m of existing 2029s for a total of $825.1m of new secured notes due 2029, which now carry a 1.5 lien on the 175 movie theaters and core intellectual property, including the AMC brand name, at Muvico. While this 1.5 lien is still junior to the liens securing the term loan and exchangeable notes, it’s more than they had before they sued!

The Wachtell group: This group owns $337m out of the $445m outstanding of the 6%/8% cash/PIK toggle secured exchangeable notes due 2030. The group has been allowed to convert $143m of their $337m at 120 cents on the dollar into 79.8 million shares of AMC common stock, which implies a conversion price of around $2.15 a share. The share price closed on July 23 at $3.50 a share, which means those shares are now valued about $280m, a 95% return on paper — not even accounting for the fact that this group’s cost basis for their convert holdings was well below par.

The group has the potential to convert the remaining $194m, for which it will receive converts due 2030, on attractive terms once the company gets approval to register more shares. And oh, the Paul Weiss group wanted a 1.5 lien on the Muvico assets? Guess what, this convert group is going to get a 1.25 lien on Muvico!  

52% of the term loan holders:  There was some game play that happened here with the holders of the $2bn worth of AMC/Muvico term loans due 2029 that were issued in the 2024 exchanges. According to 9fin sources, once the Paul Weiss group had their settlement worked out with the company and the company needed consents from the term loan lenders and the secured converts, Weil and other parties to the settlement went to Gibson Dunn, who had represented the original group in 2024, to try and corral members of that group into a consent for a reasonable fee.

As 9fin understands it, core members asked for a fee higher than what was on offer. The company decided to go around them and created a time-based framework where the first holders to sign up would get a higher fee than the rest, resulting in holders of 52% of the term loan group getting a 2% fee for not very much trouble, simply allowing an effective third lien to be issued or exchanged into well behind their first lien at Muvico.   

The losers

6%/8% exchangeable noteholders not in the Wachtell group: Holders of $107m of these notes will remain in the exchangeable notes at Muvico — effectively fourth lien after being layered by the first/1.25/1.5 liens of the remaining term loans, the new exchangeable notes due 2030 and the new senior secured notes due 2029 and subject to turnover for the benefit of the term loans — and don’t get their conversion terms reset (the conversion price was initially set at $5.66 a share). They also remain out-of-the-money in a convert that’s not really compensating them for the risk, and appear to be getting stripped of key covenant protections.

7.5% holders not in the Paul Weiss group: You don’t sue = you lose. $360m of these first lien notes will remain with solely their first liens on the AMC remainco and no extra security at Muvico.

48% of the term loan holders: According to sources, certain members of the term loan group including H/2 Capital and including HBK were staunchly asking for a consent fee far beyond the 2% fee on offer. In the dead of night, however, the company achieved the majority consent they needed without these holders, leaving this subset with just a 0.25% fee as a consolation. H/2 and HBK did not respond to requests for comment.

AMC retail shareholders: At this point, AMC has raised $3.23bn in at-the-market issuances of its own equity — more than twice its current market cap — and in so doing, repeatedly funded these debt maneuvers at the expense of its retail investors.

From 1 January 2020 through 18 February 2025, the company increased its share count by 426.7 million even after accounting for a reverse stock split, almost entirely from ATM issuances! And without exception all of those at-the-market sales to retail investors have been at share prices far above the current one.

Various hedge funds have made large sums of money by converting their debt into some of these shares at a discount and then further diluting and depressing the share price as they sold out and profited. But hey, if you bought in at the intra-day high on the NYSE of $72.62 on 2 June 2021, and had diamond hands through all the ups and downs and the 10-for-1 reverse split, then you’ll be whole again as soon as AMC shares hit about $700. They most recently closed at $3.5 per share.

At least the new exchangeable notes covenants should somewhat limit further ATM issuances once the shareholder approval to issue the underlying stock is obtained:

Pro forma capital structure

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