CEO Adam Aron Reveals How AMC Plans To Strengthen Its Balance Sheet In 2022

AMC Entertainment Holdings Inc AMC is seeing a fledgling recovery in attendance and fundamentals following the drop in moviegoing amid the COVID-19 pandemic.

The company has now set its sight on bolstering its balance sheet.

What Happened: AMC's goal for 2022 is to strengthen its balance sheet, CEO Adam Aron said in a tweet on Monday.

"There is no guarantee of success, but we will try very hard to get this done," Aron said.

With theater closures pressuring financials, AMC was forced to take on high-interest debt in 2020 and early 2021. In 2022, the company will try to refinance some of its debt in a bid to reduce interest expense, Aron said.

Secondly, the company will strive to push out some debt maturities by several years, and also aim to loosen covenants of some debt.

"We are always thinking of creative ways to make AMC's future more secure," the CEO said.

Related Link: Is AMC Ready To Make A Comeback?

Why It's Important: AMC's latest financial statements reveal that as of Sept. 30, 2021, the theater chain had corporate borrowings of $5.45 billion, other long-term liabilities of $181.4 million and finance lease liabilities of $76.3 million. As opposed to these debts and liabilities, the company's cash and cash equivalents stood at $1.613 billion.

Interest expense for the nine months ending Sept. 30, 2021 amounted to $361 million. Total revenue for the same period was $1.36 billion. AMC, therefore, had to shell out about 27% of its revenues merely to meet the interest obligations.

In late October, AMC announced it is exercising an option to repurchase $35 million of its 15% cash or 17% payment-in-kind "toggle first-lien secured notes" due 2026. This was expected to reduce the company's annual interest payments by $5.25 billion.

AMC's new year resolution to strengthen its balance sheet bodes well for the company and is crucial for its return to profitability.

At last check, AMC shares were rising 1.29% to $27.55.

Related Link: AMC Entertainment CEO Adam Aron Talks Transformation: Here's Why The Stock Could Go Ape Heading Into 2022

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