(Bloomberg) — A lender group to AMC Entertainment Holdings Inc. advised by Gibson Dunn & Crutcher made a proposal to the movie theater company to postpone the near-term maturities of its debt, according to people familiar with the matter.
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The proposal comes as AMC, the world’s largest movie theater chain, owes about $4.5 billion in long-term debt as of Dec. 31, including more than $2.8 billion in maturities in 2026, according to regulatory filings.
Extending debt payments through 2026 is a key part of discussions for the company and some of its creditors, said the people, who requested anonymity to discuss a private matter. Its 2026 debt largely consists of a $1.9 billion term loan due in April and about $969 million in second-lien notes due in June, according to the statement official documents.
A group of first-lien lenders held a call with advisers in March to discuss ways to strengthen the company’s balance sheet.
Related: AMC Cinema’s senior lenders meet to discuss chain’s debt options
Wachtell Lipton Rosen & Katz is advising a group of certain second-lien creditors, people familiar with the matter said.
A company representative declined to comment, while messages left with Gibson Dunn and Wachtell were not returned.
AMC said in a regulatory filing on April 19 that it had entered into a new letter of credit after terminating a $225 million revolving credit facility that was set to expire on April 22. The theater chain paid out outstanding amounts under the facility.
In March, AMC said it would sell up to $250 million worth of shares through an on-market offering. S&P Global Ratings in February rated AMC as “junk” from CCC+ with a negative outlook, reflecting “its significant debt load” and expectations that revenue will rise 8% through April 9 due to a limited number of film releases from Hollywood studios this year % will decline.
Movie ticket sales in the U.S. and Canada remained stubbornly below pre-Covid levels, slowing the recovery of movie theater chains that closed during the pandemic. Regal owner Cineworld Group, the world’s second-largest movie theater chain, emerged from bankruptcy last year, while Metropolitan Theaters, a 100-year-old chain based in California, filed for bankruptcy in March.
AMC avoided Chapter 11 during the pandemic as retail investors tendered its shares, allowing Chief Executive Adam Aron to raise much-needed capital.
In February, AMC reported fourth-quarter profit that fell short of analysts’ estimates – underscoring the company’s shaky finances since the pandemic. Earnings before interest, taxes, depreciation and amortization came in at $42.5 million, missing analysts’ forecast of $46.7 million. Higher interest payments also increased the company’s cash burn during this period. The board cut Aron’s target salary by 25% this year after AMC lost 85% of its value in 2023.
At the time, the chain said it had $884 million in cash as of Dec. 31. It warned that its cash burn rate is not sustainable in the long term and that operating income needs to rise to levels equivalent to pre-COVID 19 operating levels.
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