Moody's upgrades AMC, rates new bonds B3

Moody's Investors Service said it assigned a B3 (LGD5, 72%) rating to AMC Entertainment Inc.'s proposed $325 million senior subordinated bonds and upgraded its 9¾% senior subordinated bonds due 2020 to B3 (LGD5, 72%) from Caa1 (LGD5, 87%). The agency also affirmed the company's corporate family rating at B2, probability of default rating at B2-PD, senior secured credit facility at Ba2 (LGD2, 18%) and lowered the speculative grade liquidity rating to SGL-2 from SGL-1. The outlook is stable.

Moody's expects the company to use the proceeds of the notes and its December initial public offering primarily to repay its 8¾% senior bonds due June 2019, reducing leverage to 6.1 times from 6.4 times as of Sept. 30. The repayment of the senior bonds will reduce the amount of debt ahead of the subordinated bonds, and the agency said this capital mix shift leads to the upgrade of the senior subordinated debt.

The downgrade of the speculative grade liquidity rating incorporates the agency's expectations for fixed cash needs to rise once the company starts paying a quarterly dividend, likely to begin this year, as well as the reduced likelihood of cash contributions from Dalian Wanda Group Co. Ltd. following the IPO.

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