As the specter of earnings evaporation haunts many US companies directly impacted by social distancing measures, bankers and distressed funds are exploring opportunities to provide capital injections to companies facing temporary dislocations. Case in point, Citi is exploring a potential rescue financing package for AMC Entertainment, after receiving a reverse inquiry from buyside investors, said three sources familiar with the matter.
In a proactive move, bankers at Citi are reaching out to multiple funds to gauge appetite for a new deal, which could be structured as first lien paper with a double-digit coupon, said two of the sources. The exercise is opportunistic on the part of investors, and the company has not mandated Citi to raise capital, the sources added.
AMC’s ability to remain a going concern has come under pressure, as liquidity has emerged as a point of stress. The company said yesterday that its AMC Theaters brand plans to close all locations in the US for at least six to 12 weeks.
AMC’s leverage was elevated even before the effects of the novel coronavirus (COVID-19) pandemic took hold this quarter.