AMC has reduced its debt load by $106 million and has extended its maturities until the year 2027.
The company capitalized on APE to cut some debt off the top before taking on new debt due in five years from now.
AMC has replaced $506 million due in 2023 with $400 million of new debt due in 2027.
The updated balance sheet is going to ensure the movie theatre chain company is able to grow while it slowly pays off its debt.
This is a fundamental improvement for AMC.
Is the company headed in the right direction?
Let’s discuss it.
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AMC vs Wall Street
Wall Street has long betted against the century old movie theatre chain, hoping for its bankruptcy in 2020 to capitalize on short selling.
But AMC has always fought back, and I mean everyone has fought back.
CEO Adam Aron has built a relationship with shareholders and transformed the company with its innovation in crypto and NFTs.
Shareholders looking to squeeze hedge funds betting against the company evolved into investor activists, raising awareness of the malpractices on Wall Street.
Even television hosts such as Charles Payne and Jon Stewart have been a voice for retail, speaking out against the SEC’s inability to stop PFOF and dark pools from taking advantage of investors.
On the other hand, mainstream media idolizes Citadel’s Ken Griffin with no regard for the hedge fund’s long history of market manipulation.
Gary Gensler says the industry is fighting back against policies he wants to implement that will even out the playfield for retail investors.
“The SEC’s determination that the DLimit order does not violate the Exchange Act by unfairly discriminating or unduly burdening competition was reasonable and supported by substantial evidence,” the court found.
And now the industry is fighting the SEC on the possibility of eliminating payment-for-order-flow (PFOF).
A practice where market makers pay brokers a fee to reroute retail orders over to them.
Market makers tend to be short-biased and may use retails orders against them in a variety of ways.
AMC’s Fundamental Growth
AMC Entertainment has been improving fundamentally since its first quarter of 2021 when retail investors injected the company with billions of dollars in liquidity.
The movie theatre chain company had its best 2nd quarter in 3 years, seating more than 59 million guests, up 61% from two years prior.
In Q2, AMC had $52 million of positive operating cash flow and $107 million positive EBITDA, which is relative to the strength of a company.
The company ended Q2 with $1.18 billion in liquidity, a trend we’ve seen in the past with Q1 of 2022.
AMC announced in Q2 earnings it had reduced its deferred rent by more than $250 million and planned to reduce it by another $40 million ending the year.
However, AMC has announced that thanks to $APE (AMC Preferred Equity), the company has now paid off an additional $106 million in debt and extended $400 million in maturities for the year 2027.
It’s fair to say the company is far from going bankrupt today.
I’d love to hear your thoughts on AMC.
Leave a comment down below.