S&P cuts AMC Entertainment

S&P said it downgraded AMC Entertainment Holdings Inc. to CC from CCC- and put the C rating on AMC’s $100 million of second-lien notes on CreditWatch with negative implications. The agency said it expects to drop the rating to D if AMC completes the planned exchange.

“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 (unrated). We view the proposed debt-for-equity transaction as distressed and, if completed, tantamount to a default because we believe the second-lien noteholder will receive less than they were originally promised,” S&P said in a press release.

AMC also plans an at-the-market share issuance of up to 178 million shares. “It is currently unclear whether the equity market is willing to provide the company with enough capital to cover its liquidity shortfall in 2021,” the agency said.

The outlook is negative.

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