There’s a battle brewing behind the scenes at beleaguered movie theater chain AMC Entertainment.
A group of lenders led by Apollo Global Management is trying to dissuade AMC from taking a debt-restructuring offer from Silver Lake Group, proposing a competing deal that would carry the cinema chain through the pandemic, The Wall Street Journal said.
Citing anonymous sources, the report said the proposal, made this week by senior lenders including Apollo, Davidson Kempner Capital Management and Ares Management, includes several options with more cash than the Silver Lake.
AMC, the nation’s largest cinema chain, needs a cash infusion to weather the coronavirus crisis, which forced it to temporarily close more than 1,000 theaters worldwide since mid-March.
While a third of AMC’s US theaters are operating again, the company delayed plans to reopen the rest until mid-to-late August, after the release dates for Warner Bros.’ “Tenet” and Disney’s “Mulan” were postponed indefinitely.
The senior lenders offered to inject up to $400 million in senior loans that could be used to repurchase junior debt at a discount. The deal would provide AMC with more liquidity than Silver Lake’s recent offer, the lenders told The Journal.
Under the other offer, junior bondholders led by Silver Lake, would swap the $1.6 billion that they own at a discount of roughly 73 cents on the dollar for new debt while lending AMC an additional $200 million.
Silver Lake, which has a representative on AMC’s board and holds $600 million of its convertible bonds, said it would swap its holdings into first-lien debt and would also provide a $100 million senior loan.
Apollo, Ares and Davidson Kempner oppose that offer, which would result in their collateral being shared with Silver Lake.
AMC did not comment on the offers.
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