Private Equity: AMC Takes PE Route to Steer Clear of Bankruptcy

Silver Lake Group Close on AMC Deal

Private equity firm, Silver Lake Group, is on the brink of making a deal with AMC Entertainment Holdings.  The American movie theater giant is suffering due to a lack of business resulting from Covid-19, and risks having to file for Chapter 11 bankruptcy.  To avoid this, Silver Lake Group would pair with AMC based on a first-lien debt agreement.  This means that Silver Lake would trade a portion of its $600 million in convertible bonds for first-lien debt.  According to The Wall Street Journal, bondholders at Silver Lake would “provide a $200 million senior loan and to swap their unsecured claims at a discount for new, second-lien debt.”  

A Counterproposal

AMC senior leaders — which include Apollo Global Management and Ares Management Corp.— are aiming to prevent Silver Lake from going into first-lien.  Instead, the senior leaders are considering a $200 million investment in debt financing in addition to another $200 million from bondholders.  This will effectively prevent a first lien with Silver Lake.  According to the Journal, AMC will not move forward with this proposal.  

As the pandemic has forced many businesses across the country to close, movie theaters in particular have suffered.  AMC alone has closed down over 600 theaters in the United States.  The company plans to only open 450 by the end of the month.  It is evident that AMC could be in danger of closing down for good if it does not reach a good deal to revamp its finances.  

More on Silver Lake

Silver Lake is a leading technology investing company with about $40 billion assets under management.  Silver Lake is a global firm that strategically invests in technology around the world with innovative business models.  The firm currently earns around $204 billion in revenue annually.  Silver Lake’s portfolio consists of industries ranging from FinTech, Health & Wellness, and Enterprise Software to Media, Entertainment, and Sports.

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