AMC’s Ongoing Debt-to-Equity Exchanges AMC’s Ongoing Debt-to-Equity Exchanges

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By Ronald Tech

AMC stock - AMC Looks to Pay Down Debt With Several Exchange Agreements

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In recent weeks, AMC Entertainment (NYSE: AMC) shares have taken a nosedive, plummeting over 20%. Part of this decline can be chalked up to overall market weakness, yet there’s another culprit to blame – dilution.

In a recent Form 8-K, the movie theater chain disclosed its decision to engage in a series of privately negotiated exchange agreements, set to rope in a total of 3.25 million shares in exchange for $22.5 million of aggregate principal amount in its 2026 10%/12% Cash/payment-in-kind (PIK) toggle second lien subordinated notes. The implied value of these shares stood at $6.94 apiece, a move designed to trim down its substantial debt load.

But AMC is no one-hit wonder; this transaction is just one in a slew of similar agreements the company has orchestrated in the recent past. With numerous instances of issuing millions of shares in exchange for debt, AMC is steadfastly maneuvering its way out of its financial morass.

AMC’s Debt Repayment Strategy

Since December, AMC has been actively exchanging portions of its hefty debt for newly issued shares. In one instance, it recently completed a $350 million at-the-market equity offering, disposing of 48 million shares at an average per share price of $7.29. Following this, AMC meticulously utilized a chunk of the proceeds to initiate debt repurchases and debt for equity transactions to slash its liabilities by a mammoth $62.28 million.

With its debt hovering around a staggering $4.82 billion, this move to reduce the financial burden is undoubtedly a step in the right direction. However, the downside is that existing shareholders are left grappling with the side effects of dilution.

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