Amc Credit Agreement

  • Post Author:
  • Post Category:Uncategorized

AMC Credit Agreement: Understanding the Terms and Conditions

AMC Entertainment Holdings, Inc. (AMC) recently announced that it had entered into a new credit agreement with its lenders. The agreement extends the company`s borrowing capacity and provides additional financial flexibility to support its operations.

As an investor or stakeholder in AMC, it is essential to understand the terms and conditions of the credit agreement. Here`s a breakdown of what you need to know:

Borrowing Capacity and Interest Rates

Under the agreement, AMC is allowed to borrow up to $500 million, an increase from its previous borrowing limit of $350 million. The credit agreement also includes an “accordion feature,” which allows the company to further increase its borrowing capacity by up to $350 million, subject to certain conditions.

The interest rates for the credit facility are based on a tiered pricing structure. The rates range from LIBOR (London Interbank Offered Rate) plus 3.50% to LIBOR plus 4.25%. The actual interest rate will depend on AMC`s leverage ratio, which measures the company`s debt relative to its earnings.

Financial Covenants

The credit agreement includes several financial covenants that AMC must meet to avoid defaulting on its loan payments. The covenants include a minimum liquidity requirement, a maximum leverage ratio, and a minimum interest coverage ratio.

The minimum liquidity requirement specifies that AMC must maintain cash and cash equivalents of at least $200 million. The maximum leverage ratio limits the company`s total debt to a certain multiple of its earnings before interest, taxes, depreciation, and amortization (EBITDA). Finally, the minimum interest coverage ratio measures the company`s ability to cover its interest expenses with its earnings.

Use of Proceeds

AMC intends to use the proceeds from the credit facility for general corporate purposes, including capital expenditures, acquisitions, and working capital needs.

Risk Factors

The credit agreement also outlines several risk factors that could affect AMC`s ability to repay its loans. These factors include changes in market conditions, competition, and regulatory risks. Additionally, the agreement states that if AMC defaults on its loan payments, the lenders could require the company to sell assets or take other actions to repay the debt.

Conclusion

The new credit agreement provides AMC with additional financial flexibility and borrowing capacity to support its operations. However, it also includes several financial covenants and risk factors that investors should be aware of. By understanding the terms and conditions of the credit facility, investors can make informed decisions about their investments in AMC.