AMC pressures balance sheet with gold mining investment – S&P Global

Thank you for your interest in S&P Global Market Intelligence! We noticed you’ve identified yourself as a student. Through existing partnerships with academic institutions around the globe, it’s likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.
At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you’ve completed your degree. We apologize for any inconvenience this may cause.
Fill out the form so we can connect you to the right person.
If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.
Thank you.
One of our representatives will be in touch soon to help get you started with your demo.
We generated a verification code for you

AMC pressures balance sheet with gold mining investment
Expand Your Perspective: Data & Distribution Q&A
LME price soars as Russia invades Ukraine
M&A In Focus: What’s Next for Emerging Tech?
2022 outlook for Latin American multichannel, broadband and 5G markets
AMC Entertainment Holdings Inc. continues to surprise investors with new strategies, deviating from its core theatrical business.
The company, along with precious metals and mining investor Eric Sprott, each put up $27.9 million to fund the cash-strapped Hycroft Mining Holding Corp., a small gold and silver mining venture with one active operation in Nevada.
The deal will provide Hycroft a lifeline after a 2015 bankruptcy and a 2020 reverse-merger with special-purpose acquisition corporation Mudrick Capital Acquisition Corp. For AMC, the investment is relatively small against its cash position, but the theater operator itself is struggling with a massive, high-rate debt load following the COVID-19 pandemic.
Moviegoers are returning to theaters after two years of closures, capacity limits and low supply film output from studios, but AMC is still operating in the red. The company reported a $134.4 million net loss against $1.17 billion in revenue in the fourth quarter of 2021.
SNL Image
AMC is holding cash assets of $1.59 billion, well in excess of the Hycroft price tag. However, it is also holding $10.75 billion in total debt as of fourth-quarter 2021, with the majority of that debt carrying coupons over 5% and much of it with coupons near or above 10%.
In a news release, AMC CEO Adam Aron justified the transaction by comparing AMC’s burdened financial position through the pandemic with Hycroft’s current position, arguing that AMC demonstrated its ability to navigate liquidity challenges amid negative investor sentiment.
“We are taking AMC’s demonstrated achievement in writing the playbook as to how to navigate through liquidity challenge and applying our lessons learned to another entity in Hycroft Mining,” the CEO said.
Starting in 2020, AMC issued expensive debt, refinanced old debt at much higher interest rates and diluted its market capital with aggressive equity offerings.
SNL Image
However, while AMC was able to string together a cash position through the pandemic, debt analysts viewed AMC’s financial engineering as tantamount to a credit default, and many expected the company to require bankruptcy protection or an M&A transaction. AMC was ultimately saved by a serendipitous wave of attention from retail investors during late 2020 and early 2021. AMC became one of the favored “meme stocks,” and retail investors piled into AMC, boosted its stock price and provided the company with access to desperately needed capital.
Hycroft is in a similar position. In SEC filings, the company has stated that there is material doubt it can remain solvent without a capital infusion.
SNL Image
Investors responded favorably to the deal news, launching Hycroft shares 37% following the announcement. However, the price spike may have been impacted by heavy trading leading up to the deal. Trading volume for Hycroft spiked beginning March 7, a week before the announcement, and increased to nearly 350 million shares exchanged in a single day from average daily shares volumes well below 1 million. No public news or filing corresponded to the leap in activity March 7. Hycroft’s stock hit a 52-week low March 2.
SNL Image


Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button