A private-equity firm that owns a chunk of AMC Entertainment Holdings Inc.’s bonds is converting them into equity following a remarkable rally in the cinema giant’s stock, as AMC struggles to ward off bankruptcy amid closures of movie theaters during the pandemic, WSJ Pro Bankruptcy reported. AMC’s share price quadrupled this week after the company inked a substantial debt and equity raise and subsequently became the latest stock to be touted by the online community of retail investors who helped pump up GameStop Inc. AMC said yesterday that Silver Lake Group LLC on Thursday has elected to convert the $600 million of convertible notes it owns into equity. The Silver Lake swap illustrates how AMC and other volatile companies caught up in the retail trading mania can benefit from surges of bullish sentiment, in this case enabling AMC to cut approximately a tenth of its roughly $6 billion in debt. After closing at $19.90 a share on Wednesday, having more than quadrupled in value from the start of the week, AMC’s stock retraced much of its gains, closing at $8.63 on yesterday, down about 56.6%. AMC share trading was restricted on Robinhood Markets Inc. and other popular online brokerages yesterday, drawing sharp rebuke from individual investors. Menlo Park, Calif.-based Silver Lake bought its unsecured notes in 2018, gaining a seat on AMC’s board. After the coronavirus pandemic forced AMC to temporarily close nearly all of its roughly 1,000 cinemas around the world, Silver Lake entered into a deal to convert its unsecured notes into a new first-lien convertible bond, meaning it would have first dibs on AMC’s assets in the event of a default.
