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S&P places AMC, Carmike on Watch Negative following Nordic Cinema deal

S&P Global Ratings on Jan. 24 placed AMC Entertainment Holdings Inc.'s ratings, including its corporate credit rating, and ratings of AMC's unit Carmike Cinemas Inc. on CreditWatch with negative implications.

The rating agency took the action following AMC's announcement to buy Stockholm-based Nordic Cinema Group Holding AB from European private equity company Bridgepoint and Swedish media group Bonnier Holding in an all-cash transaction valued at $929 million. Through the acquisition, AMC will acquire 68 theaters, 463 screens and an additional minority investment in 50 additional theaters in Europe.

S&P does not expect regulatory problems with the transaction as Nordic Cinema's theaters are in Baltic and Nordic countries, a region with no AMC presence. AMC will increase the size, scale and diversification of its exhibition assets via the deal. This would be of some advantage to AMC's film rental and concession negotiations for the combined entity, S&P added.

As the acquisition closely follows the 2016 acquisitions of Carmike Cinemas and Odeon & UCI Cinemas Group Ltd., "AMC's ability to integrate its acquisitions and recognize synergies will be critical to its deleveraging plans. Integration missteps could lead to leverage increasing well above 5x. AMC is also required to divest a substantial portion of its stake in National CineMedia Inc. as a result of the Carmike acquisition, and it could use the proceeds to reduce debt," as per the rating agency.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.