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(Bloomberg) — AMC Entertainment Holdings Inc. turned to an existing creditor to refinance debt after turbulence in public markets derailed a planned bond and loan sale — though the deal includes incentives to bring it back to investors before long.
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The cinema chain operator on Friday unveiled an agreement with Deutsche Bank AG for a $425 million senior secured credit facility to repay its Odeon unit’s 12.75% notes due in November 2027. As a result, AMC shelved an offering of about $2.5 billion in debt that would also have refinanced its Muvico unit’s $2 billion loan maturing in 2029.
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The deal with Deutsche Bank has a provision that encourages AMC to pursue a broader refinancing within a year, according to people familiar with the matter.
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If the company refinances its Muvico and Odeon debt within that time, it can repay the new loan at 102 cents on the dollar, the people said, asking not to be identified because the discussions are private. Refinancing just the loan on its own would come at a higher cost under a two-year non-call provision.
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The agreement underscores how indebted firms and banks are seeking alternatives at a time when AI-driven disruption fears and an escalating conflict in the Middle East have pushed up refinancing costs in the US leveraged loan market.
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Firms including C&D Technologies Inc and Herbalife Ltd. have also shelved loan offerings in the past few days, while Consolidated Energy Ltd. and Arclin Inc. priced deals at steep discounts.
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The new credit facility is expected to “strengthen the company’s balance sheet, extend debt maturities, and reduce interest rates while preserving flexibility to streamline and simplify the capital structure,” AMC said in its Friday statement.
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The company didn’t immediately respond to a request for comment. A Deutsche Bank spokesperson declined to comment.
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AMC sees a “significant opportunity” to continue closing underperforming theaters and is betting that a strong slate of films planned over the next couple years will improve its fortunes, executives said during a call with analysts last month.
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—With assistance from Thomas Buckley.
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