AMC Entertainment CEO Adam Aron Issues New Year’s Resolution, Vowing To “Try Very Hard” To Refinance Debt And Shore Up Balance Sheet

In a New Year’s resolution shared on Twitter, AMC Entertainment CEO adam aron vowed to try to refinance the company’s debt and strengthen its balance sheet.

In response to the pandemic, in 2020 and early 2021, the top movie theater circuit took out debt “at higher interest rates to survive,” he said. Aaron said he expects to make progress in repaying or restructuring those obligations this year.

Investors responded positively to his post, pushing AMC’s shares up nearly 2% to $27.68. The stock, of course, has been on a wild ride over the past year, becoming a meme darling for individual investors held on Reddit. It reached a high of $72.62 last spring, a dramatic rebound from its $2 levels in the dark final days of 2020. covid Close.

The jump in the company’s stock has taken place against a foreboding backdrop. Whereas Spider-Man: No Way Home Given the massive box office returns, there are major existential questions over the future of the commercial film. Total theatrical revenue in 2021 was $4.5 billion, less than half of pre-pandemic levels. The changed scenario gives particularly immediate priority to the financial position of the AMC.

“If we can, in 2022 I want to refinance some of our loans to reduce our interest expense, extend some loan maturities by several years, and loosen contracts,” Aron wrote. “With a better financial position, one of our 2022 goals is to strengthen our balance sheet. There is no guarantee of success, but we will do our best to meet it. We will always strive to make the future of AMC more secure. Thinking of creative ways to do that.”

In AMC’s most recent quarterly report, for the period ending September 30, the company said it had approximately $5.2 billion in debt as well as hundreds of millions in lease obligations. While the $1.95 billion loan carries a reasonable corporate interest rate of 3%, much of the balance is at very high interest rates. For example, about $1.5 billion has a rate of between 10% and 12% and another $800 million has a rate of 10.5%.

Even before Covid swept the entertainment business and the world in general, the company’s debt burden worried many Wall Streeters and industry observers.

Eric Handler, an analyst at MKM Partners, has a negative rating on AMC, and has a 12-month price target of $1 on the stock. The company’s balance sheet is their primary complaint. In addition to the debt, Handler noted in a December report, the company issued additional shares to capitalize on the meme-stock frenzy, resulting in a five-fold increase in outstanding balances and, therefore, dilution for investors. Even if box office revenue returned to previous levels, he wrote in the report, “the return to peak results is nowhere near enough for AMC to grow into a reasonable multiplier.”

Here are Aaron’s tweets: