AMC Entertainment bonds rise despite hefty 2020 losses

Bonds backing AMC Entertainment Holdings Inc. rose to fresh pandemic-era highs this morning despite the company reporting a $4.59 billion loss in 2020 as full-year revenue fell 77%.

On a per-share basis, the losses amounted to $6.21 for the fourth quarter and $39.15 for the year, representing a dramatic drop from 2019 levels. But Q4 losses and revenue still managed to beat analyst expectations, and AMC bonds and stock advanced as CEO Adam Aron told analysts on last night's earnings call that the company's focus "is no longer on survival."

AMC's 10% cash/12% pay-in-kind second-lien secured notes due 2026 were up 2.5 points in early trading, pushing weekly gains to 8.5 points and establishing a new high trade for the bonds at 86.5. The notes hit single digits after management in October said AMC could run out of cash by the end of 2020. The borrower's 5.875% senior subordinated notes due 2026 were up half a point, at a one-year high of 65, while the 10.5% first-lien secured 2026 notes gained three-quarters of a point to test 109, after dipping below 60 in November.

Having come perilously close to filing for bankruptcy protection more than once during the pandemic, AMC now has more than $1 billion in cash on hand, and management predicts the company will be cash flow breakeven, possibly slightly positive, in the fourth quarter of 2021.

"Since our last quarterly call, AMC raised $1.222 billion of cash, we got rid of $600 million of debt, our theaters are reopening, big movie titles are coming," an ebullient Aron told analysts. "Ladies and gentlemen, see you at the movies."

In the meantime, AMC still has more than $5 billion of debt and $450 million of deferred rent and still expects to be burning through around $50 million a month during the third quarter, which CFO Sean Goodman described on the call as a "transition period." Goodman emphasized that liquidity and deleveraging remain AMC's priorities as he offered capital expenditure guidance for 2021 of $100 million.