AMC shares jumped by nearly one-third yesterday after the movie theater operator announced that it secured a $100 million cash injection from New York-based Mudric Capital Management through a newly issued debt instrument.
In a press release published by AMC in the first few hours of the American stock trading session, the firm disclosed that it had negotiated $100 million in cash from Mudric in the form of a new first lien cash/payment-in-kind financing, which is an instrument that gives the lender the first claim if the borrower were to succumb to bankruptcy.
The instrument will generate a 15% annual rate if its semi-annual coupon is paid in cash, while the company also has the possibility of paying the first three installments in kind at a higher rate of 17% per year.
This means that the company can use an asset, good, or service to cover the payment, although, from the fourth installment and forward, payments will only be received in cash, according to the conditions disclosed by the 8-K form registered with the US Securities and Exchange Commission (SEC).
Meanwhile, Mudric also agreed to exchange a total of $100 million in existing AMC second-lien debt into common stock, with a total of 21,978,022 shares issued to settle the transaction.
Based on the terms of that exchange, AMC shares have been valued by Mudric at $4.55 per share – roughly two times the value of the stock’s closing price from last Friday.
Meanwhile, AMC shares advanced 31.3% during yesterday’s session, ending the day at $3.06 per share, still down $1.49 from the deal’s implicit valuation for the stock.
What’s next for AMC shares?
Yesterday’s corporate debt deal would be the latest of a series of measures taken by the American movie theater operator to strengthen its liquidity, as government-imposed lockdowns forced the company to shut down its network of venues, leaving the firm in a delicate financial situation as revenues quickly dried up.
Last year, the company was forced to raise approximately $800 million in new debt while also restructuring roughly $2.6 billion of its existing financial obligations to deal with the unprecedented downturn in its business. Moreover, AMC also sold 15 million shares at-the-market for a total of $56.1 million.
Meanwhile, during the third quarter of 2020, the firm reported a total of $120 million in revenue, nearly 91% less than the amount it brought during the same period in 2019, while losing as much as $905 million in that sole quarter.
Back then, AMC had a total of $418 million in cash and equivalents while its net quarterly cash burn ended at approximately $355 million.
This recent deal would give the firm an extra injection of liquidity that could help it in surviving the strong blow that the virus has dealt to its business, although the path to recovery remains challenging as the COVID situation persists in the United States despite the government’s ongoing efforts to vaccinate the country’s population at a fast pace.
In this regard, it is important to note that revenues from the US market accounted for nearly 74% of the company’s total sales in 2019, which makes the firm highly sensitive to the course of the pandemic in the North American country.
In the last few days, the number of daily contagions in the United States has been steadily declining, moving to 149,000 cases yesterday, down from a peak of 308,000 infected individuals in a single day on 7 January according to data from Worldometer.
Trusted & Regulated Stock & CFD Brokers
What we like
- 0% Fees on Stocks
- 5000+ Stocks, ETFs and other Markets
- Accepts Paypal Deposits
Min Deposit
$200
Charge per Trade
Zero Commission on real stocks
64 traders signed up today
Visit Now67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Available Assets
- Total Number of Stocks & Shares5000+
- US Stocks
- German Stocks
- UK Stocks
- European
- ETF Stocks
- IPO
- Funds
- Bonds
- Options
- Futures
- CFDs
- Crypto
Charge per Trade
- FTSE 100 Zero Commission
- NASDAQ Zero Commission
- DAX Zero Commission
- Facebook Zero Commission
- Alphabet Zero Commission
- Tesla Zero Commission
- Apple Zero Commission
- Microsoft Zero Commission
Deposit Method
- Wire Transfer
- Credit Cards
- Bank Account
- Paypall
- Skrill
- Neteller
What we like
- Sign up today and get $5 free
- Fractals Available
- Paypal Available
Min Deposit
$0
Charge per Trade
$1 to $9 PCM
Visit Now
Investing in financial markets carries risk, you have the potential to lose your total investment.
Available Assets
- Total Number of Shares999
- US Stocks
- German Stocks
- UK Stocks
- European Stocks
- EFTs
- IPOs
- Funds
- Bonds
- Options
- Futures
- CFDs
- Crypto
Charge per Trade
- FTSE 100 $1 - $9 per month
- NASDAQ $1 - $9 per month
- DAX $1 - $9 per month
- Facebook $1 - $9 per month
- Alphabet $1 - $9 per month
- Telsa $1 - $9 per month
- Apple $1 - $9 per month
- Microsoft $1 - $9 per month
Deposit Method
- Wire Transfer
- Credit Cards
- Bank Account
Share
Alejandro Arrieche
