AMC Entertainment (NYSE:AMC) is doing its best to avoid bankruptcy with new news on Monday.
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Here’s what investors in AMC stock need to know about the recent bankruptcy-related news.
- AMC has signed a deal with Mudrick Capital Management to secure financing of $100 million.
- This comes in the form of a new first-lien debt financing.
- It’s also worth noting that Mudrick Capital Management has previously lent out funds to the theater chain.
- Mudrick Capital Management is already an investor in the company and is converting $100 million of debt owed to it into shares of AMC stock.
- As a result of these deals, AMC is issuing 21,978,022 shares of its stock to the debtholder.
- AMC says that it plans to use the funds to strengthen its near-term liquidity position.
- The need for funding comes as the company deals with the ongoing effects of the novel coronavirus.
- Theater chains are one of the companies that have suffered most from the pandemic with many remaining closed or operating in a limited capacity.
- When the coronavirus lockdowns first started earlier this year, there was news claiming that AMC was considering bankruptcy.
- While nothing has come of that talk yet, those reports did claim that the company was in the early stages of talks for one.
- The fact that AMC Entertainment is securing extra funds through debt is a sign that the company is doing what it can to avoid bankruptcy.
- Even so, that doesn’t mean there won’t be news of an AMC bankruptcy news in the coming months.
AMC stock was down 17.6% as of Monday morning.
On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article.