AMC Entertainment to Refinance High-Interest Debt

One reason companies seek to restructure their debt is to take advantage of improving market conditions. In AMC’s case, the movie-theater chain’s quarterly loss narrowed in the second half of last year as people continued to return to theaters. AMC said last month that “Spider-Man: No Way Home” was the single-highest-grossing movie title on its opening night in AMC’s history for the month of December.

Despite the improving outlook for AMC, the company will still have to convince its lenders to agree to push out debt maturities and extend covenant suspensions.

“There is no guarantee of success, but we will try very hard to get this done. We are always thinking of creative ways to make AMC’s future more secure,” Mr. Aron added.

Shares in AMC gave up morning gains and were down about 1% Monday afternoon after falling almost 25% over the past three months.

Leawood, Kan.-based AMC was already saddled with debt and losing money after a string of acquisitions that made it the world’s largest theater chain before the Covid-19 pandemic hit. The company entered the pandemic with $4.9 billion in debt.

The company warned about possible bankruptcy at the end of 2020, but was able to avoid filing for protections by raising nearly $1 billion in debt and equity among risk-hungry investors.

AMC’s efforts to stave off bankruptcy were given a helping hand by so-called meme-stock traders who piled into shares of AMC, GameStop Corp. and other popular targets.

Under Mr. Aron’s guidance, AMC has used the opportunity to raise funds by selling more shares and slashing its debt load.

As of Sept. 30, AMC said it has $5.4 billion in corporate borrowings and near-record liquidity of more than $1.8 billion, which includes cash and undrawn revolving credit lines. When the company reported its latest quarterly earnings in November, Mr. Aron said he didn’t anticipate the company needing to borrow under those lines of credit in the next 12 months.