AMC Entertainment's ($AMC) Muvico Maneuver: Engineering a Second Act
How an Unrestricted Subsidiary Bought Time for the World's Largest Theater Chain
Last August, I wrote about AMC’s upcoming 2026 maturity wall and predicted the company could pursue a drop-down transaction to buy time, highlighting that even the longer-dated 1st lien secured notes were at risk of asset-stripping.
Fast forward to July 2024, and that’s exactly what happened—AMC executed a massive $2.4 billion exchange through a new subsidiary called Muvico, pushing those 2026 maturities out to 2029-30. The deal hinged on transferring the company’s more profitable theaters and intellectual property into an unrestricted subsidiary, effectively creating a new credit silo with premium assets.
While the Muvico transaction was clever financial engineering that bought AMC crucial breathing room, the fundamental question remains: is this capital structure sustainable? Even if theatrical attendance stabilizes post-pandemic, AMC still faces serious headwinds—high fixed costs, substantial debt service, and uncertain box office recovery (made worse by recent Hollywood strikes).
This matters for all stakeholders (including shareholders) trying to parse AMC’s increasingly complex capital structure. Future liability management could shift significant value between stakeholders depending on how it’s structured. With multiple competing interests across the cap stack and several paths forward, understanding these dynamics is critical for anyone looking at AMC’s securities.
In this piece, I’ll break down where things stand after the Muvico transaction and analyze what could come next.
I. Prologue: Setting the Stage
The Exhibition Giant
AMC’s theatrical dominance is well established—874 theaters and 9,800 screens. But while this scale affirms its market leadership, the company’s narrative in recent years has been focused on understanding its complex capital structure through unprecedented disruption. To those new to the story, the company has faced a three-front battle: recovering from pandemic-era shutdowns, weathering Hollywood labor disputes, and confronting secular challenges reshaping consumer viewing habits. This convergence has transformed a relatively straightforward operating business into a complex financial engineering challenge.
The Summer Transaction
In July 2024, AMC executed a landmark series of debt exchanges that effectively pushed out $2.4 billion of 2026 debt maturities to 2029-30. The transaction was facilitated through a “drop-down” strategy that transferred approximately 1/3rd of AMC’s domestic theater portfolio to a newly created unrestricted subsidiary, Muvico. Critical to the transaction was the transfer of 175 domestic theaters, representing 31% of AMC’s domestic portfolio but generating approximately 50% of domestic EBITDA, along with material IP assets including the AMC brand name. This asymmetric transfer of higher-performing assets created the foundation for the subsequent financing transactions.
Disclosure: The information provided is for informational purposes only and should not be considered as investment advice. Any investment decisions made based on the information provided are at your own risk. It is essential to conduct your own research and consult a qualified financial advisor before making any investment decisions. Investing involves risks, and past performance is not indicative of future results. By using this information, you acknowledge that you are responsible for your own decisions and release me from any liability. Seek professional advice tailored to your financial situation and objectives.