AMC paper sinks, stock hits new low; Mallinckrodt bonds soft; distressed returns lower

By Cristal Cody

Tupelo, Miss., Aug. 23 – AMC Entertainment Holdings, Inc.’s bonds declined further on Wednesday while its stock sank to a new 52-week low ahead of the company’s plans to wipe out its preferred stock class in the upcoming session.

The movie theater operator’s stock has plunged more than 60% over the last three days.

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) were the company’s busiest bond traded on $15 million plus of volume, a source said.

“That’s down,” a trader said.

Meanwhile, news erupted that Mallinckrodt plc plans to file its second Chapter 11 bankruptcy after just emerging from bankruptcy a year ago.

The move has been expected since the company skipped paying interest payments on two of its bonds in June.

Mallinckrodt’s most distressed issue, the 10% second-lien notes due 2025, hovered barely above a 10 handle on Wednesday in steady trading after sliding about 70 points in June, a source said.

Stocks pushed higher in the first strong session seen this week with indices up across the board.

The S&P 500 index closed 1.1% higher, while the iShares iBoxx High Yield Corporate Bond ETF climbed 60 cents, or 0.81%, to $74.71.

The CBOE Volatility index pulled back by 5.83% on the day to 15.98.

AMC volatile

AMC’s bonds continued to move lower on Wednesday as the day’s biggest distressed decliner, while its stock hit a new 52-week low in staggering volume levels over the session, according to market sources.

The company’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) fell about 1 point to 74 1/8 bid on $15.75 million of paper traded.

The issue dropped 7/8 point on $15.5 million of volume on Tuesday and moved Monday at 76 1/8 bid on $12.8 million of trading.

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) went out flat at 69½ bid on $6.2 million of secondary supply.

The issue gave back ½ point on Tuesday on $7.94 million of trading.

Coming up on Thursday, the company intends to conduct a share increase and reverse stock split to allow the conversion of all of AMC’s outstanding preferred equity units into shares of class A common stock.

The APEs are expected to be delisted from the New York Stock Exchange and cease trading on Friday.

AMC moved to conduct the conversion after the Delaware Court of Chancery earlier this month approved the settlement of a shareholder lawsuit brought by Allegheny County Employees’ Retirement System over the issuance of its preferred stock.

AMC’s common stock hit a new 52-week low early Wednesday, touching $1.94 in heavy trading before clawing back a few pennies before lunch.

The stock (NYSE: AMC) was down over 21% by late morning on already more than 127 million shares traded and closed off 23.14% at $1.96 on 197 million shares traded.

The stock’s 52-week range now is $1.94 to $10.75 after sliding over 60% so far this week.

The Leawood, Kan.-based movie theater owner’s preferred stock (NYSE: APE) dropped 8% to $1.73 in heavy activity.

Mallinckrodt trades

Mallinckrodt’s 10% second-lien notes due 2025 (/CC) were quoted at a last print of 11.93 on Wednesday on $6 million of secondary trading, a source reported.

The bonds sank to the teens in June from a 78 handle.

Meanwhile, Mallinckrodt’s 11½% notes due 2028 (Caa3/D) went out at 90 bid on $1.4 million of trading.

The company announced on Wednesday that it has entered into a restructuring support agreement with the majority of holders of its first- and second-lien debt and the opioid settlement trust for a plan that will cut its total funded debt by $1.9 billion and extend its maturity runway.

Mallinckrodt said it expects to complete the pre-packaged Chapter 11 bankruptcy process in the fourth quarter.

As part of the plan, the company will eliminate all of its $650 million of second-lien debt and its outstanding ordinary shares will be extinguished.

The restructuring plan provides for a final payment of $250 million to the opioid trust, following previous payments of $450 million.

Mallinckrodt reported June 15 that it was considering bankruptcy after the board elected not to pay the interest payments due on its 10% notes and 11½% first-lien senior secured note due 2028.

The company made a partial payment as part of its opioid-related settlement reached with federal authorities when it exited Chapter 11 bankruptcy on June 16, 2022 but faced deadlines for a $200 million payment that were extended to June 23, June 30 and finally to Aug. 15.

A class action complaint announced by law firm Pomerantz LLP was filed against Mallinckrodt and certain officers in the U.S. District Court for the District of New Jersey for investors who acquired the company’s securities between June 17, 2022 and June 14, 2023.

The Dublin-based pharmaceutical company’s stock (NYSE: MNK) closed down 19.15% at 48 cents, near the 52-week range of 41 cents and well below the high of $16.00.

Distressed returns weaken

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns remained soft on Tuesday at minus 0.18% versus minus 0.09% on Monday.

Month-to-date total returns moved under 1% to 0.96% on Tuesday, down from 1.14% on Monday.

Year-to-date distressed total returns fell to 16.04%, compared to 16.24% at the start of the week.

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