An $850 million credit backing the merger of AMC Theaters and Loews Cineplex hit the market last Thursday, with Citigroup, JPMorgan and Credit Suisse First Boston taking tickets. The facility consists of a six-year, $200 million revolver with price talk at LIBOR plus 1 3/4% and a seven-year, $650 million term "B" loan with price talk in the range of LIBOR plus 2 1/2%. According to Moody's Investors Service, the deal also consists of $325 million senior subordinated notes. One investor speculated this might be a covenant-lite deal based on requests from the sponsors.
Syndication was launched at a bank meeting held at the AMC Empire 25 Theatre on West 42nd Street. "I suspect this is going to do fine," one portfolio manager said. "It's not a controversial transaction...People like movie theaters." Bain Capital, The Carlyle Group and Spectrum Equity Investors own Loews, while AMC is owned by JPMorgan Partners and Apollo Management. The combined company is to operate under the name of AMC Entertainment.
Moody's assigned a rating of Ba3 to AMC's senior secured revolver and term loan, and a B3 rating to its senior subsidized notes. Along with funding the merger, AMC is expected to use the financing from the credit facility to pay down Loews' bank debt and to improve liquidity for the combined company.
Calls to AMC and Loews were not returned. Spokesmen at Spectrum and Bain declined to comment. Calls to The Carlyle Group, Apollo and JPMorgan Partners were also not returned.