Moody's rates AMC notes B3

Moody's Investors Service said it assigned a B3 (LGD5) rating to AMC Entertainment Inc.’s proposed $600 million senior subordinated notes. AMC's B2 corporate family rating and stable outlook are unchanged.

Proceeds will be used to refinance the current $600 million senior subordinated notes due 2020.

AMC Entertainment's B2 corporate family rating continues to incorporate its aggressive capital structure, with leverage of about 6.4 times debt-to-EBITDA and minimal free cash flow. The agency said this credit profile poses challenge for operating in an inherently volatile industry reliant on movie studios for product to drive the attendance that leads to cash flow from admissions and concessions.

However, good liquidity enables the company to better manage the volatility, Moody’s said, and the company has demonstrated some success in growing EBITDA per patron through initiatives to improve the customer experience.

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