Fri 02/12/2021 12:17 PM
Share this article:
Lenders to AMC Entertainment’s $225 million revolving credit facility due 2024 have been working with Latham & Watkins as legal advisor as the movie theater chain seeks a waiver of the maximum 6x secured leverage covenant as well as a separate potential waiver if a going-concern warning is included in AMC’s full-year 2020 report, according to sources. Citigroup is the administrative agent for the revolver. Continue reading as our Americas Core Credit team analyzes the AMC revolving credit facility and Request a Trial for access to the linked documents as well as our analysis and reporting on hundreds of other stressed, distressed and performing credits.

The covenant relief the company received in April 2020, pursuant to which the maintenance covenant for the benefit of the revolving lenders and tested only when revolving usage exceeds 35%, expires following the current quarter ending March 31, according to Americas Covenants by Reorg. AMC’s revolver was fully drawn as of Sept. 30, 2020. Although the reinstated financial maintenance covenant will be calculated using annualized EBITDA for the June, September and December 2021 quarters, the company said last month that “we do not expect to be able to satisfy [the maintenance covenant].”

Separately, AMC has also raised the possibility that its audited annual financial statements for 2020 could include “going concern” language. Under each tranche of the company’s secured debt, an event of default will be triggered if its annual financial statements include such language from its auditors, unless the going-concern language relates to an upcoming maturity within one year of the date of auditor’s opinions or to a potential inability to satisfy a financial covenant in the future.

Latham & Watkins did not immediately respond to a request for comment.

--Harvard Zhang
Share this article:
This article is an example of the content you may receive if you subscribe to a product of Reorg Research, Inc. or one of its affiliates (collectively, “Reorg”). The information contained herein should not be construed as legal, investment, accounting or other professional services advice on any subject. Reorg, its affiliates, officers, directors, partners and employees expressly disclaim all liability in respect to actions taken or not taken based on any or all the contents of this publication. Copyright © 2021 Reorg Research, Inc. All rights reserved.
Thank you for signing up
for Reorg on the Record!