AMC Entertainment Holdings, Inc. provided a business update Monday for the fourth quarter ending December 31, 2022.
AMC announced the acquisition of the 13-screen former Arclight Cinemas theatre located at The Hub on Causeway, the large-scale mixed-use development at North Station, in Boston, Massachusetts. This location opened in December 2019 and closed only three months later due to Covid-19.
As of December 19, 2022, since the inception of its APE At-The-Market Program (“ATM”) offering, AMC has raised approximately $162.4M of gross cash proceeds before fees and commissions, through the sale of 125.9M AMC Preferred Equity Units. During the fourth quarter of 2022 to date, AMC has raised approximately $153.2M of gross cash proceeds before fees and commissions, through the sale of 123.2 million AMC Preferred Equity Units.
(The AMC Preferred Equity acronym APE references the self-named “apes,” investors who helped surge AMC’s stock in 2021.)
During the fourth quarter of 2022, AMC used a portion of the net proceeds from its ATM to repurchase approximately $30.7M principal amount of its 10% Second Lien Debt, due 2026, at an average discount of approximately 60%; and approximately $5.25M principal amount of its 6.125% Senior Subordinated Notes, due 2027, at an average discount of 70%.
During the fourth quarter of 2022, as a result of the debt repurchases and the previously announced Odeon debt refinancing, AMC reduced the principal amounts of its debt by approximately $107M, bringing the total principal debt reduction during 2022 to approximately $180M.
AMC’s liquidity position (cash, cash equivalents and undrawn revolving credit facility capacity) as of December 31, 2022 is currently estimated to be between $725M and $825M, after debt repurchases, including $211.2M of undrawn capacity under the company’s revolving credit facility, subject to operating performance during the remainder of the holiday period in 2022 and the timing of landlord concessions. This implies an improvement in the net decrease in cash and cash equivalents and restricted cash of between $110M and $210M compared to the third quarter of 2022.
““Even though the APE units and our common shares are economically equivalent, it is disappointing that the APE units have since inception consistently traded at a significant discount to the AMC common shares,” AMC Entertainment’s Chair and CEO Adam Aron said in a press release.
“While the trading prices of the two securities seem to reflect distinct market and trading dynamics, the APEs are serving precisely the purpose originally intended for them,” Aron continued. “At a time when one or more of our competitors have been facing potentially devastating liquidity challenges, by contrast during the past 90 days, AMC has been able to raise $162 million of additional cash through the sale of equity thereby improving our own liquidity position markedly.
“In addition, AMC reduced debt for the third time this year, including most recently by buying back debt at a substantial 61% discount and is able to contemplate various opportunities to add theatres to our fleet including just having successfully secured for AMC the attractive former Arclight Boston.”
“Our outlook for the industry is positive as we expect the box office will be larger in 2023 than in 2022,” Aron concluded. “Our liquidity position is strong, as we continue to demonstrate our ability to raise cash, thereby strengthening our balance sheet. We also continue to enhance our footprint by acquiring superb theatres without significant capital outlays, while at the same time exiting under-performing locations. For so many reasons, we believe the future remains bright for AMC.”