AMC Theaters held discussions with some Cineworld lenders about a “potential strategic acquisition” of unspecified theaters in the U.S. and Europe.
News of the talks were contained in an SEC filing issued by AMC on Tuesday, and follows the Sept. 7 Chapter 11 bankruptcy filing from Cineworld, the world’s second-largest movie theater company and owner of Regal Cinemas in the U.S. Cineworld operates 747 sites and 9,139 screens in 10 countries.
A Chapter 11 proceeding allows companies to shed non-core assets, and AMC said its talks were with Cineworld lenders “exploring strategic alternatives.”
“A definitive agreement with the lenders has not been reached regarding the terms of any proposal to be presented to the debtors in the Cineworld cases, and at this time negotiations are not continuing,” AMC added in the regulatory filing.
The exhibition giant, which has its own high debt load following disruption to its sector from the pandemic crisis and its impact on the local multiplex, said any possible acquisition of Cineworld assets would be financed in part by issuing AMC Preferred Equity units, or APEs, to shareholders and debt financing provided by the lenders.
AMC has already raised around $162 million from its APEs since launching the stock to pay down debt and fund strategic acquisitions of distressed theater assets.
“While AMC reserves the right to continue to explore the acquisition of value enhancing strategic assets, there can be no assurance that AMC will resume any discussions with the lenders or, if it were to do so, that it would be able to agree with lenders or any other party as to the terms of a mutually acceptable proposal,” AMC added in a cautionary statement in the SEC filing.
By eyeing a wider acquisition of certain Cineworld assets, AMC will be betting that the global box office will continue to improve in 2023. Not yet returning to pre-pandemic levels, the flow of movies to theaters continues to be slower than before and with the pandemic still wreaking havoc in certain markets, including China.