AMC Entertainment: Cinema chain’s latest carnival act is Taylor Swift

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Taylor Swift may have finally met her match with AMC Entertainment. The pop music supernova has almost single-handedly propped up the US economy with her blockbuster concert tour this summer. In October, she will hit the big screen with one of her live performances.

For AMC, that show cannot come soon enough. The floundering US cinema chain has staved off bankruptcy since the pandemic shutdowns. But its gig should soon be up.

On Wednesday, AMC announced that it had sold $325mn worth of stock in a so-called “at the market offering”. Those substantial funds are offset by the $260mn AMC burnt in the first half of 2023. Barbie, Oppenheimer and now Swift should offer boosts through December. But as the Hollywood writers’ strike drags on, next year could well be a bust. Plus, $9bn of gross debt waits for no one.

AMC would have liked to have sold stock far earlier this year. But only by using clever financial engineering and a court fight could it get shareholder authorisation to expand its available number of shares.

Its stock traded as high as $60 each in 2021 during its wild retail meme stock heyday. At the beginning of this year, its shares were at about $4. In this week’s issuance, it has offered stock at under $1, adjusting for a reverse stock split. Put differently, the company just sold a fifth of itself at a cut rate price.

One must marvel that so many investors had interest in such a high risk punt. AMC’s debt load includes billions of dollars of junk bonds as well as operating leases. In this sense, AMC resembles temporary office group WeWork, another enterprise with a property footprint unsuited to the current economy.

Eventually AMC will require heavy-duty balance sheet restructuring, possibly within a bankruptcy court. AMC’s showman boss Adam Aron has done an admirable job keeping it financially upright for this long. What he really needs is Swift to release a new concert for screening every week.

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