By Victor Swezey
S&P Global Ratings downgraded AMC Entertainment following a $1.1 billion debt exchange the credit rating firm described as distressed.
AMC was cut to selective default from CCC+ since under the terms of the deal lenders would receive less than initially promised, S&P said on Tuesday. The exchange stripped collateral from secured notes due in 2029, as well as any part of the existing term loan that aren't exchanged.
On Monday, AMC said it repaid $519 million of its second-lien notes due in 2026, and exchanged $1.1 billion of its term loan for a new term loan due in 2029. At the same time, AMC transferred some of its theater and intellectual property assets to a new subsidiary that will issue a term loan and exchangeable notes.
"The transaction significantly reduces AMC's 2026 debt maturities, but does not improve the company's ability to generate free operating cash flow," S&P said.
Ratings were also cut on the Leawood, Kan.-based movie theater chain's second-lien notes to D from CCC-, and on their senior secured notes due in 2029 to D from B-.
Write to Victor Swezey at victor.swezey@wsj.com; @vicswezey
(END) Dow Jones Newswires
July 23, 2024 18:13 ET (22:13 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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