Fitch affirms AMC

Fitch Ratings said it affirmed the issuer default rating of AMC Entertainment, Inc. at B after AMC Entertainment Holdings, Inc. said it signed an agreement to be acquired by Dalian Wanda Group Co. Ltd. with the deal valued at about $2.6 billion.

The outlook remains negative.

The proposed acquisition will constitute a change of control under all of AMC's debt agreements, the agency noted, requiring the company to make a 101% change-of-control offer.

Wanda has provided AMC financing commitments to fund any potential change-of-control debt redemptions. AMC may seek to fund any debt redemption with its own liquidity or market issuance, the agency said.

The ratings factor in the intermediate and long-term risks associated with increased competition from at-home entertainment media, limited control over revenue trends, the pressure on film distribution windows, increasing indirect competition from other distribution channels and high operating leverage, the agency noted.

As of Dec. 29, lease-adjusted gross leverage at 6.7x, unadjusted gross leverage at 9.3x and, if the NCM dividend is included in EBITDA, unadjusted gross leverage is 8.4x. Fitch said it expects unadjusted gross leverage to remain above 7.5x over the next two fiscal year-end periods.

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