Moody’s shifts AMC view to stable

Moody’s Investors Service said it appended an /LD, or limited default, designator to AMC Entertainment Holdings Inc.’s Caa2-PD rating and revised the outlook to stable from positive.

The /LD designation follows AMC completing an exchange agreement with a single note holder to convert $100 million of the 10%/12% Cash/PIK toggle second-lien subordinated secured notes due 2026 to about 91 million AMC preferred equity units at a previously determined fixed price, the agency said. It will remove the /LD after three business days.

“The designation results from Moody's practice of interpreting circumstances in which a debt holder accepts a compromise offering of a diminished financial obligation as an indication of an untenable debt capital structure. In AMC's case, the company agreed to exchange its notes, which were trading at a substantial discount to par prior to closing, for equity. The exchange has the effect of allowing AMC to avoid default given the reduction in debt as a result of the conversion,” the agency said in a press release.

The stable outlook reflects the expectation that AMC's deleveraging to 8x will be delayed due to the box office's measured cyclical recovery, the agency said.

Additionally, Moody’s affirmed AMC’s ratings, including the B3 rating on the $400 million of senior secured first-lien notes residing at Odeon Finco plc, the Caa1 ratings on AMC's senior secured debt (consisting of a $225 million revolving credit facility, $1.93 billion outstanding senior secured term loan and $950 million of senior secured first-lien notes), the Caa3 rating on the $1.224 billion outstanding on the cash/PIK toggle second-lien subordinated secured notes, and the Ca ratings on the $279.7 million outstanding of senior subordinated notes. The agency also lowered the speculative grade liquidity rating to SGL-3 from SGL-2.

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