AMC first-lien, second-lien notes rally on ‘unlikely’ Amazon merger talk; DISH declines

By Cristal Cody

Tupelo, Miss., March 28 – AMC Entertainment Holdings, Inc.’s bonds rallied more than 2 points in heavy trading on Tuesday on market chatter of a potential merger with Amazon.com, Inc.

The issuer was among the most active distressed names traded on Tuesday on nearly $50 million of volume, a source said.

The 10% senior secured second-lien notes due 2026 (Caa3/CCC-) picked up more than 2½ points, while the 7½% senior secured first-lien notes due 2029 (Caa1/B-) went out about 3½ points higher.

However, Amazon is “unlikely to acquire AMC,” Wedbush Securities analysts Alicia Reese and Michael Pachter said in a note on Tuesday, mentioning other opportunities for Amazon.com to cherry pick movie screen acquisitions, such as bankrupt cinema operator Cineworld Group plc.

“And in the end, we do not think that AMC is a likely acquisition target in general given its massive debt ($4.6 billion net debt) and inflated valuation,” the analysts said.

Market tone was softer on Tuesday as stocks edged lower.

The iShares iBoxx High Yield Corporate Bond ETF fell 4 cents to $73.38.

The CBOE Volatility index was down 3% at 19.97.

In other heavily traded distressed paper on Tuesday, DISH Network Corp.’s 5 7/8% senior notes due 2024 (B3/B) declined 1¾ points with the paper among the most active distressed issues on more than $23 million of secondary volume, a source said.

AMC jumps

AMC Entertainment’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) rallied over 2½ points in heaving trading that topped $30 million on Tuesday, a source said.

The notes were quoted in the 60 bid area.

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) traded about 3½ points better at 69 bid on Tuesday on $18 million of secondary supply.

The company’s stock closed up 13.19% at $5.15.

AMC, a Leawood, Kan.-based movie theater owner, faces an April 27 court hearing over a lawsuit from Allegheny County Employees’ Retirement System in the Delaware Court of Chancery regarding its issuance of preferred equity.

AMC announced March 14 that shareholders approved its share increase and reverse split proposals but that it cannot implement the shareholder vote until a court ruling in the case.

DISH lower

DISH’s 5 7/8% senior notes due 2024 (B3/B) declined 1¾ points with the paper among the most active distressed issues trading on more than $23 million of secondary volume on Tuesday, a source said.

The notes were quoted at 82 1/8 bid.

The Englewood, Colo.-based satellite cable operator’s shares were up modestly by 0.98% at $8.68 by the close.

Distressed returns up

S&P U.S. High Yield Corporate Distressed Bond index one-day returns started the week off in positive territory at 0.37% on Monday.

Returns were minus 1.25% on Friday and minus 0.57% in the same session a week ago.

Month-to-date return losses narrowed to minus 5.53% on Monday from minus 5.88% ahead of the weekend.

Quarterly and year-to-date total returns improved on Monday to 3.07% from 2.7% on Friday.

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