Moody's rates AMC loan Ba2

Moody's Investors Service said it assigned a Ba2 rating to the proposed senior secured credit facility of AMC Entertainment, Inc. and affirmed its B2 corporate family rating.

The proposed transaction consists of a $125 million to $150 million first-lien revolver and a $775 million first-lien term loan.

Moody's said it expects the company to use proceeds primarily to repay existing first-lien bank debt.

The transaction favorably extends maturities and results in a modest reduction in interest expense, the agency said.

Moody's also said it affirmed the SGL-1 speculative-grade liquidity rating and continues to consider AMC Entertainment's liquidity very good.

The proposed transaction does not meaningfully alter the mix of debt capital, so Moody's affirmed AMC Entertainment's corporate family rating at B2, probability of default rating at B2-PD, 8¾% senior unsecured bonds at B2 with its LGD adjusted to LGD 4, 54% from LGD 4, 55% and 9¾% senior subordinated bonds at Caa1 (LGD 5, 87%).

The ratings continue to incorporate the company's aggressive capital structure with leverage of about 6.6x and minimal free cash flow, the agency said.

This credit profile poses challenge for operating in an inherently volatile industry reliant on movie studios, Moody's said.

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