Global movie exhibitor AMC Entertainment Holdings Inc. announced today that it has obtained £300 million of new liquidity via a £400 million senior secured term loan to be borrowed by its Odeon Cinemas subsidiary, boosting liquidity sufficiently to enable the company to operate at least to July 2021 and quelling fears of a near-term bankruptcy.
AMC said its wholly owned subsidiary, Odeon Cinemas Group Ltd., on Jan. 24 entered into a commitment letter for a £400 million senior secured term loan facility, of which £100 million will be used to refinance an outstanding revolving credit facility of that amount and the balance is new debt. The term loan matures in 2.5 years and bears interest at 10.75% in the first year and 11.25% thereafter. The company has the option of paying interest in cash or in kind.
The commitment letter terminates on Feb. 28 if the term loan facility is not entered into by then.
AMC also today entered into an equity distribution agreement with Goldman Sachs & Co. LLC and B. Riley Securities Inc., to sell up to 50 million shares of class A common stock through an "at the market offering program." At today's intraday price of roughly $4.50 per share, this offering could bring in another $225 million.
In a Form 8-K filing today, AMC updated investors on its liquidity situation and theater openings. The company said 438 of its 593 U.S. theaters were open as of Jan. 21, all with limited seating capacities and limited opening hours. It said U.S. attendance during the fourth quarter was down by roughly 92.3% over the same period last year.
Internationally, AMC said it was operating 86 of its 360 leased and partnership theaters as of Jan. 21, with limited seating capacities and limited opening hours. International's attendance decline during October and November was approximately 88.6% compared to last year.
In the liquidity update, AMC summarized the impact of recent debt and equity raises, saying it has raised a total of $917 million: $406 million from the sale of 164.7 million shares of common stock; $100 million from the Jan. 15 issuance of 15%/17% Cash/PIK toggle first-lien secured notes due 2026 to Mudrick Capital Management; and $411 million from the £300 million in additional term loan debt issued by Odeon. The company also swapped $100 million of second-lien debt held by Mudrick for common stock.
AMC noted that its balance sheet contained roughly $308 million in cash and equivalents at Dec. 31, 2020, and that its operating cash burn rate during the fourth quarter averaged approximately $124 million per month. Referring to the financing transactions and current liquidity, Adam Aron, AMC's CEO and president, said, "This means that any talk of an imminent bankruptcy for AMC is completely off the table."
More specifically, AMC said in today's 8-K that "in the absence of any increase in attendance levels and assuming continued landlord concessions and no additional liquidity," the company's liquidity would "extend operations through to July 2021." It added that if attendance increased through 2021 to levels reaching 90% of 2019 attendance by the fourth quarter, and including new cash coming in from equity offerings and "additional landlord concessions," the company would have sufficient funds to survive the full-year 2021.
AMC noted that it continues to seek new sources of liquidity, including equity raises, further negotiations with landlords for rent reductions, abatements and deferrals, and new money financings.