AMC CEO promises on Twitter to refinance the movie chain’s debt


By Paul R. La Monica, CNN Business

The chain of cinemas AMC was a darling of same stock crowd in 2021, soaring by nearly 1,200% last year thanks to the love of rowdy Reddit fans. So what does AMC plan to do for a sequel? For starters, he wants to clean up his balance sheet, which is more scary than a slasher horror film.

AMC CEO Adam Aron said in two tweets On Monday morning, his New Years resolution for the company was to get its borrowing costs back in order. He noted that the company “got into debt at high interest rates to survive” in 2020 and early last year.

“If we can, in 2022, I would like to refinance part of our debt to reduce our interest costs, push back some debt maturities by several years and relax the covenants”, Aron tweeted to its more than 230,000 subscribers.

“With an improving financial situation, one of our 2022 objectives is to strengthen our balance sheet. There is no guarantee of success, but we will do our best to achieve it. We are always thinking of creative ways to secure AMC’s future ”, Aron wrote in a follow-up tweet.

Aron’s Twitter account is not verified, but the company confirmed in a Securities and Exchange Commission filing on Monday that the tweets were legitimately coming from the CEO.

Resolving to refinance could make a big difference to AMC’s bottom line. The company, which is set to lose money again in 2022, had around $ 5.7 billion in borrowings, long-term liabilities and finance leases on its balance sheet at the end of the third quarter of the year. ‘last year.

While this is down from a level of nearly $ 6.1 billion at the end of 2020, it is still up from AMC’s pre-pandemic borrowing of around $ 5 billion at the end of 2020. end of 2019. Increasing debt is costly.

AMC must put its finances back in place to ensure long-term success

AMC said in its third quarter earnings report that it had interest charges of $ 332.3 million in the first nine months of 2021, up from $ 238.2 million in the first three quarters. from 2020.

Aron seems to realize that the company must reduce these costs if it is to have any chance of having a viable long-term future. AMC can only go so far as by having individual investors, the so-called reddit monkeys, trying to squeeze short selling hedge funds betting against the stock. To that end, AMC shares fell more than 1% on Monday despite Aron’s tweets.

The overall activity of movie theaters continues to be largely driven by big hits, such as the recent blockbuster “Spider-Man: No Way Home”. And these don’t happen that often.

Meanwhile, the pandemic has taken its toll on the industry. Shares of rival movie chains Cinemark and IMAX both ended lower in 2021, as overall U.S. box office returns remained around 60% below 2019 levels, according to Mojo Box Office figures.

Additionally, theaters face even more intense competition from streaming services such as Netflix, Disney +, and HBO Max, which, like CNN, are part of AT & T’s WarnerMedia unit.

But AMC has been able to withstand some of these pressures better than other traditional movie chains, in part thanks to the company’s awareness of individual traders on Reddit.

Last year AMC introduced a program called “Investor Connect”, that promised rewards like free popcorn to loyal fans.

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