AMC Entertainment Drowns on DE, Cash Runs out in January

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On December 16, 2020, S&P Global Ratings lowered its issuer credit rating on AMC Entertainment Holdings, Inc. to CC from CCC-. The downgrade follows AMC's announcement that one of its noteholders has agreed to exchange $100 million of its existing second-lien notes for equity and provide the company with $100 million of new first-lien 15%/17% payment in kind (PIK) toggle notes. The ratings agency views the proposed debt-for-equity transaction as distressed and, if completed, tantamount to a default because S&P Global believes the second-lien noteholder will receive less than they were originally promised. Without receiving the $100 million of new debt financing, the Company believes it will run out of cash in January. AMC's monthly cash burn was about $125 million in October and November and the ratings agency has seen no indication that it will materially improve. Therefore, this transaction will likely provide the Company with less than an additional month of liquidity.

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