AMC Entertainment Holdings Stock News and Forecast: AMC nearly doubles debt raise

AMC Entertainment Holdings Stock News and Forecast: AMC nearly doubles debt raise
  • AMC stock slumped yesterday as debt raise news was digested.
  • AMC now nearly doubles the raise from $500 million to $950 million.
  • AMC is down over 40% in the last month and 43% for 2022.

AMC Entertainment Holdings (AMC) stock is back on the news wires the last few days, but unfortunately for holders it has not been well received. AMC stock put in three consecutive green days before slumping over 8% on Wednesday. Risk aversion returned, but AMC also announced it was raising more debt to refinance its existing debt. The stock closed at $15.42 for an 8.5% loss on the day.

AMC Stock News

This morning AMC has nearly doubled its debt offering from $500 million to $950 million. There is also see a bit more detail on the offering. It is to carry a 7.5% interest rate and expires in 2029. The funds will be used to retire existing debt at 10.5% expiring in 2025. The extra $450 million sees AMC also redeeming some notes at 15-17% due in 2026. So AMC is basically remortgaging at a lower rate. This will reduce its interest payments.

AMC needs to do this, however, as it carries too much debt. The company has $5.4 billion in long-term debt. AMC has about $1.6 billion in cash, but it spends nearly $100 million per quarter on debt repayments. So remortgaging makes sense, but it is not exactly comforting.

CEO Adam Aron has been looking for ways to improve the financial position of the company, and investors baulked at more share issuances. This was the obvious next step but comes a bit later than optimal. Junk bond yields had reached a record low during the summer. The rate of 7.5% is more or less in line with the sector. CCC high yield corporate bonds are currently yielding on average 8.3%. This is up from 6% during the summer. Moody's reacted positively and changed its outlook to positive.

AMC Stock Forecast

For now, AMC shares are holding the support at $14.54, but risk aversion is growing after FB earnings last night and a suprisngly hawkish Bank of England this morning. Equity markets will suffer with high risk names getting hit the most. Expect $14.54 to break with the next support at $12.22. A break here and the lure of $10 will be obvious. Only beaking $21.04 ends this curent bearish trend.

AMC Entertainment Holdings Stock News and Forecast: AMC nearly doubles debt raise - 1

AMC daily chart

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