By Paul Deckelman
New York, Oct. 28 – AMC Entertainment Holdings Inc. priced a two-part, dual-currency offering (B2/B+) consisting of tranches of dollar- and sterling-denominated senior subordinated notes, high-yield syndicate sources said Friday.
The dollar-denominated portion of the deal consisted of $595 million of 5 7/8% notes due 2026, which priced at par after the tranche was upsized from $535 million originally.
The dollar piece came at the rich end of talk. Initial yield guidance on the dollar bonds was in the low 6% area, with subsequent price talk envisioning a yield of around 6%.
The sterling-denominated portion of the deal consisted of £250 million of 6 3/8% notes due 2024, which priced at par after the tranche was downsized from £300 million originally. The difference was shifted into the dollar-denominated tranche.
The sterling portion also came at the rich end of talk. Price talk on the sterling bonds indicated a yield of around 6½%.
Citigroup Global Markets Inc. was the left-lead book-running manager on both tranches, with Bank of America Merrill Lynch, Barclays Capital Inc., Credit Suisse Securities (USA) LLC and HSBC Securities (USA) Inc. as joint bookrunners for the Rule 144A and Regulation S with registration rights offering.
Both tranches have a make-whole call, at 50 basis points over Treasuries for the dollar bonds and 50 basis points over Gilts for the sterling tranche.
The dollar bonds come with five years of call protection while the sterling bonds have three years of call protection.
Both tranches have three-year equity clawback provisions allowing for the redemption of up to 35% of the tranche, and both have change-of-control provisions allowing the bonds to be put back to the issuer at 101% of their par value.
AMC Entertainment, a Leawood, Kan.-based movie theater operator, announced the approximately $900 million equivalent two-part bond offering on Oct. 20, along with a concurrent $500 million dollar-denominated term loan financing due 2023, in the form of an incremental term loan B tranche under its existing credit agreement.
The bond portion of the financing was marketed to potential investors via a roadshow that began in New York on Monday and continued there on Tuesday, moving on to Boston on Wednesday and then to London on Thursday and Friday.
The company plans to use the net proceeds from the notes offering, together with the borrowings under the new term loans, cash on hand and other sources to fund the pending acquisitions of Odeon & UCI Cinemas Holdings Ltd. and Carmike Cinemas, Inc., to repay outstanding debt of Odeon & UCI and to fund transaction fees and expenses.
AMC announced on July 12 that it intends to acquire London-based Odeon & UCI Cinemas, the largest movie theater company in Europe, from private equity firm Terra Firma in a transaction valued at £921 million, comprised of £500 million for the equity, 75% in cash and 25% in stock, and the assumption of £407 million of net debt as of March 31, 2016 to be simultaneously refinanced at closing. Assuming a closing date of Dec. 31, 2016 and a sterling-to-dollar exchange rate of $1.30 to the pound, the transaction is valued at approximately $1.20 billion under U.K. GAAP.
AMC announced on July 25 that it had entered into an amended merger agreement with Columbus, Ga.-based theater operator Carmike, whose shareholders can opt to receive either $33.06 in cash or 1.0819 shares of AMC’s class A common stock as consideration, with a maximum of 30% of Carmike’s outstanding shares to be exchanged for AMC shares valued in the aggregate at $250 million and the remaining 70% to be exchanged for a total of $585 million in cash. The transaction’s total $1.2 billion enterprise value includes the assumption of Carmike’s outstanding net debt.
The Carmike transaction, like the Odeon & UCI transaction, is scheduled to close at the end of the year.
| Issuer: | AMC Entertainment Holdings Inc.
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| Amount: | $900 million equivalent
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| Left bookrunner: | Citigroup Global Markets Inc.
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| Bookrunners | Bank of America Merrill Lynch, Barclays Capital Inc., Credit Suisse Securities (USA) LLC and HSBC Securities (USA) Inc. (joint)
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| Trade date: | Oct. 28
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| Settlement date: | Nov. 8
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| Ratings: | Moody’s: B2
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| S&P: B+
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| Change-of-control | Put option at 101
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| Distribution: | Rule 144A and Regulation S with registration rights
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| Marketing: | Roadshow
|
|
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| Dollar-denominated notes
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| Amount: | $595 million, upsized from $535 million
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| Maturity: | Nov. 15, 2026
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| Coupon: | 5 7/8%
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| Price: | Par
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| Yield: | 5 7/8%
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| Spread: | 403 bps over 1.5% Treasury due Aug. 15, 2026
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| Call: | Make-whole call at Treasuries plus 50 bps until Nov. 15, 2021, then callable at 102.938; callable on or after Nov. 15, 2022 at 101.958, callable on or after Nov. 15, 2023 at 100.979, and finally callable at par on or after Nov. 15, 2024
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| Equity clawback: | For up to 35% of the issue until Nov. 15, 2019 at 105.875
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| Price talk: | initial guidance low 6% area, later 6%
|
|
|
| Sterling-denominated notes
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| Amount: | £250 million (downsized from £300 million)
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| Maturity: | Nov. 15, 2024
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| Coupon: | 6 3/8%
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| Price: | Par
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| Yield: | 6 3/8%
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| Spread: | 534 bps over 2.75% Gilt due Nov. 7, 2024
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| Call: | Make-whole call at Gilts plus 50 bps until Nov. 15, 2019, then callable at 104.781; callable on or after Nov. 15, 2020 at 103.188, callable on or after Nov. 15, 2021 at 101.594, and finally callable at par on or after Nov. 15, 2022
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| Equity clawback: | For up to 35% of the issue until Nov. 15, 2019 at 106. 375
|
| Price talk: | 6½%
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