AP
- AMC is in advanced talks to refinance its expensive debt, the Wall Street Journal reported.
- The company is looking to cut interest rates and extend debt maturities, the Journal said.
- AMC's stock and bond prices have slumped in the new year amid a broader market rout.
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AMC Entertainment, the movie-theater chain turned meme stock, is reportedly advancing on its plans to refinance some of its high-interest debt — even as its stock and bond prices dip.
The company is in advanced talks with several interested parties about lowering its interest burden and stretching out bond payment due dates by several years, the Wall Street Journal reported, citing a person familiar with the matter. AMC did not immediately respond to Insider's request for comment.
Efforts to reach a debt deal come as AMC has been limited in its ability to pay off debt while the environment for refinancing is getting tougher.
Staunch AMC stock investors who refer to themselves as "apes" have rejected AMC's prior attempts to issue new shares, effectively removing that as an option to lower its debt burden, the Journal pointed out. Meanwhile, a more hawkish Federal Reserve that's pivoting toward higher interest rates could complicate debt refinancing.
Though the broader market has slumped on tighter Fed monetary policy, meme stocks like AMC and GameStop have taken an even bigger hit. Shares of the movie theater chain have fallen 40% to $15.84 as of Tuesday — a fraction of the high-flying price the stock garnered last year.
Its bonds have also slumped. The company's $1.5 billion in secured 10% bonds due in 2026 fell to 92 cents on the dollar from 99 cents earlier this month, as another bond fell as low as 69 cents on the dollar from 72 cents earlier this month, according to the Journal, which cited data from MarketAxess.
The personal familiar told the Journal the company may still be able to ink a refinancing deal to lower the cost of interest even if AMC's declining bond prices cause yields to rise.
AMC boss Adam Aron previously tweeted to retail investors that the company's New Year's resolution was to refinance its high-interest bonds. He said the company took on more debt in order to survive amid the COVID-19 pandemic but is seeking ways to cut interest rates, extend maturities, and loosen covenants. As of September, filings show the company has $5.4 billion in debt.
In 2020, AMC became a meme stock as retail traders caused the share price to skyrocket alongside other companies in an effort to squeeze short sellers. Aron capitalized on the hype by offering NFTs, or non-fungible tokens, expanding payment options to include popular cryptocurrencies, and offering investors perks like free popcorn.
Experts have said meme stocks are likely fading in the new year as retail traders set their sights on new assets like cryptocurrencies. An analyst at Macquarie Group told the Journal there's growing "fatigue" around meme stocks as the narrative behind them becomes less attractive.
source https://markets.businessinsider.com/news/stocks/amc-stock-apes-hawkish-fed-squeezes-meme-stock-debt-deal-2022-1