Business & Practice

AMC Lenders Are Said to Tap Gibson Dunn as Theaters Shutter (2)

March 26, 2020, 11:46 PM

Lenders to AMC Entertainment Holdings Inc. tapped Gibson Dunn & Crutcher LLP to help advise them after the virus pandemic forced the heavily indebted chain to shutter its U.S. movie theaters, choking off revenue.

The term-loan lenders engaged the law firm as a pre-emptive measure for talks with AMC’s management that are ongoing, people with knowledge of the matter said, asking not to be identified discussing a private matter. The company has more than $5 billion in debt outstanding.

AMC closed all of its approximately 600 U.S. locations last week after public officials around the world placed limits on public gatherings to prevent the spread of the Covid-19 virus. AMC now has “no revenue and substantial fixed costs,” which has left it scrambling to preserve cash, the company has said.

A spokesman from AMC didn’t immediately respond to messages seeking comment. Representatives for Gibson Dunn didn’t have an immediate comment.

Credit Drawn

The chain also drew all remaining available amounts under its credit facilities as a precautionary measure to increase its cash position and preserve financial flexibility in light of the Covid-19 outbreak, according to a company filing.

Citigroup Inc. approached investment firms in recent days about a potential loan which would provide the company with additional financing, according to people familiar with the matter. The loan, which has been shopped with a double-digit interest rate of about 15%, could rank equally to the company’s existing loan in the event of default, said the people. The talks are in early stages and the final size and maturity of the loan have not been determined, they added.

A representative for Citi declined to comment.

AMC is the biggest movie exhibition company in the U.S. and Europe with about 1,000 theaters and 11,000 screens across the globe, according to its website. Regal Entertainment Group has also said it would close its cinemas, after previously cutting capacity in half.

The National Association of Theatre Owners, a trade group for the industry, has been lobbying legislators for federal relief money.

(Updates with proposed loan deal in sixth paragraph. An earlier story corrected the amount of debt outstanding.)

--With assistance from Lauren Coleman-Lochner and Kelly Gilblom.

To contact the reporters on this story:
Sally Bakewell in New York at sbakewell1@bloomberg.net;
Katherine Doherty in New York at kdoherty23@bloomberg.net;
Sridhar Natarajan in New York at snatarajan15@bloomberg.net

To contact the editors responsible for this story:
Natalie Harrison at nharrison73@bloomberg.net;
Rick Green at rgreen18@bloomberg.net

© 2020 Bloomberg L.P. All rights reserved. Used with permission.

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