AMC Entertainment Holdings Inc. is nearing a restructuring deal that would help stave off a near-term bankruptcy filing while turning down a competing financing offer from senior lenders including Apollo Global Management Inc., according to people familiar with the matter.
The proposed deal, which could be announced within days, would require bondholders to provide a $200 million senior loan and to swap their unsecured claims at a discount for new, second-lien debt, people familiar with the matter said. Private-equity firm Silver Lake Group LLC, which has a representative on the company’s board and owns $600 million of convertible bonds, would swap for first-lien debt, they said.
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Senior lenders including Apollo, Davidson Kempner Capital Management LP and Ares Management Corp. have pushed back against the proposal, which would allow Silver Lake to share in the collateral pledged to them.
The group, which is represented by law firm Gibson, Dunn & Crutcher LLP, submitted a counterproposal in recent days in which they offered to inject an additional $200 million in senior debt financing, on top of $200 million supplied by junior bondholders.
As a condition of the counteroffer, the senior lenders wanted Silver Lake blocked from swapping into the top-ranking debt and subordinated beneath the senior loans in the payment line, people familiar with the matter said.
Silver Lake resisted the counteroffer, and AMC is close to rejecting it, they said.
The conflict marks the latest instance of asset managers and private-equity funds competing with each other to protect investments in companies that are running low on cash due to the coronavirus pandemic. Similar disputes have broken out between investors in companies ranging from travel-booking platform Travelport Worldwide Ltd. to mattress maker Serta Simmons Bedding LLC.
AMC was forced to shut down its more than 1,000 theaters world-wide due to the COVID-19 pandemic and the company hired law firm Weil, Gotshal & Manges LLP and financial adviser Moelis & Co. for advice on weathering the outbreak.
The company had hoped to get junior bondholders to exchange their claims at a close to 50 percent discount for new second-priority securities. As of June 30, less than 8 percent of the company’s outstanding $2.3 billion of junior bonds had been swapped, prompting AMC to entertain new offers from various creditor groups, people familiar with the matter said.
The financing proposals were designed to keep the company afloat through the planned reopening of its theaters around the country, while putting the creditors that participate in a better position if AMC does end up filing for chapter 11 protection.
AMC is postponing plans to reopen the bulk of its U.S. locations until July 30, following date changes for the releases of two major films, the live-action remake of “Mulan” and science-fiction thriller “Tenet.”
States across the U.S. have been reopening parts of their economies, such as restaurants, retail stores and other public commercial spaces. But movie theaters have largely stayed shut because of the challenges of packing large numbers of people into indoor auditoriums.
Smaller, independent theaters have reopened in some states, showing older films to a limited number of moviegoers. But the three biggest chains—AMC, Cineworld Group PLC’s Regal Entertainment Group and Cinemark Holdings Inc.—have decided to stay closed until they have new movies to show.