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AMC Entertainment (NYSE:AMC) stock is trending again today on news that the company placed $400 million in debt with its Odeon Finco unit.
Specifically, AMC raised $400 million in what it called a private offering of five-year bonds meant to repay existing term loans. Odeon Finco was formed in London at the start of the year as a holding company to assume debts.
The bonds will be repaid by AMC. Here's what AMC stock investors need to know moving forward.
AMC Stock: What's Playing?
AMC Entertainment CEO Adam Aron has been raising money ever since AMC became a meme stock. In early 2021, shares were beloved by small investors looking to squeeze short sellers.
Once upon a time, AMC did billions in ticket sales each year, but the pandemic hit the company hard. Of course, Aron has been hoping the box office will recover with the end of the pandemic. But Goldman Sachs analysts now heavily doubt that can ever occur.
Aron sold new common stock during the meme stock mania and, when shareholders objected to new sales, he sold preferred stock as AMC Preferred Equity Units (NYSE:APE). All these shares have been losing altitude amid this year's bear market. Continued inflation has also made bond yields attractive.
As of June, AMC had nearly $10 billion in long-term debt against about $1 billion in cash. Its main domestic rival, Cineworld (OTCMKTS:CNNWQ) — which owns Regal Cinemas — filed for bankruptcy in September.
Paying term loans with longer-term paper may hurt AMC's balance sheet, but it does give the company some breathing room in the near term. AMC was able to cut its losses in half during the June quarter, to $122 million or 24 cents per share. The company lost $76.6 million in cash during the period as well.
What Happens Next?
AMC has not yet announced when it will report earnings for the September quarter. Based on its most recent report, though, that's expected to happen on Nov. 4.
Looking forward, analysts will be watching AMC's next report closely. They will look at not just the earnings figure but also the operating cash flow for an indication of the future for both AMC stock and the company's bonds.
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On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology's Big Bang: Yesterday, Today and Tomorrow with Moore's Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack.
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