Spurned Bondholders Sue AMC Entertainment Over Restructuring
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(Bloomberg) -- A group of AMC Entertainment Holdings Inc.’s noteholders have sued the movie chain company, claiming a sweeping restructuring deal in July eroded their rights and prioritized more junior bondholders.
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First-lien noteholders, including Anchorage Capital and its related funds, Carronade Capital Management, Deutsche Bank Securities Inc. and P Schoenfeld Asset Management, filed a lawsuit in a New York state court on Tuesday, arguing the deal stripped them of collateral.
In July, AMC came to a refinancing agreement that effectively pushed out maturities for $1.2 billion in senior term loans to 2029 from 2026, and allowed AMC to issue new debt to repurchase $414 million of second-lien notes.
As part of the deal, AMC moved 175 theaters and related intellectual property out of the reach of some creditors as part of the transaction, according to regulatory filings.
The deal “took a knife to the bargained-for rights” of first-lien creditors, according to the complaint. Those theaters were “purportedly no longer collateral” for the plaintiffs’ notes, the suit said.
AMC and Paul Weiss Rifkind Wharton & Garrison, which is representing the plaintiffs, did not respond to requests for comment.
The plaintiffs have asked the court to require AMC to assign them with senior liens on the collateral that was transferred away.
The July restructuring helped AMC cuts its debt load and extend near-term maturities, as its ticket sales remain below pre-pandemic levels.
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