Theater chain AMC reaches new debt restructuring deal, shares surge

(Reuters) -AMC Entertainment Holdings has reached an agreement with creditors to extend the maturity of up to $2.45 billion of its debt, the theater chain said on Monday, sending its shares up 12.6% in late afternoon trading.

As part of the deal, the company will transfer certain leases, property, and related assets and rights for 175 theaters to a newly formed subsidiary, Muvico, along with intellectual property including the AMC brand name.

The agreement extends the maturities from 2026 to 2029 and beyond, and will also allow the company to reduce debt by $464 million by converting exchangeable notes into equity.

The world's largest theater chain had been grappling with the aftermath of the Hollywood strikes last year that shut down productions and affected U.S. theater chains.

However, CEO Adam Aron on Monday signaled a rebound.

"The box office challenges of the first half of 2024 are now in the rear-view mirror. The recovery momentum is back," Aron said in a statement.

"We expect strong year-over-year box office growth in the back half of 2024, continuing into 2025 and 2026".

AMC's shares have also see-sawed over the past few months after stock influencer "Roaring Kitty" Keith Gill's brief return in May rekindled the "meme stock" frenzy. The stock has shed about 18% of its value so far this year to last close.

The company said on Monday it would also issue $1.2 billion of new secured term loans due 2029 in consideration for an open market purchase of senior secured term loans due 2026.

AMC had completed a series of refinancing transactions in April and had amended its credit agreement.

The company had reduced gross debt outstanding by $516 million since September last year, it said in May.

(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Devika Syamnath and Sriraj Kalluvila)