AMC Entertainment Holdings Inc. is considering raising money by selling more stock, capitalizing on the unprecedented runup in its shares this week, Bloomberg News reported. A stock sale would follow AMC announcing $917 million in fresh financing Monday, which helped it stave off the threat of bankruptcy. On Wednesday, it said that it completed a previously announced at-the-market equity program, raising $305 million. AMC has benefited from a Reddit-fueled investing frenzy that sent heavily shorted stocks into the stratosphere this week. Though the stock plummeted on Thursday —hurt by Robinhood and other trading platforms curbing trading in its shares — AMC remains up 307% this year.
The largest shareholder in high-end mall owner Macerich Co. sold its entire holding for nearly $500 million when the stock soared after being touted on Reddit, Bloomberg News reported. Ontario Teachers’ Pension Plan sold 24.56 million shares on Wednesday at an average price of $20.25 a share, according to details in an amended 13D. The Canadian fund had owned 16.4% of the company, according to data complied by Bloomberg. Macerich, a real estate investment trust based in Santa Monica, Calif., has been struggling for years and was battered by a pandemic that forced malls to shut down and pushed consumers toward e-commerce. The stock lost 84% of its value over a three-year period ending Dec. 31, 2020. Then comments began appearing on Reddit boards including r/wallstreetbets, the subreddit now famous for helping to fuel an astonishing rise in GameStop Corp., AMC Entertainment Holdings Inc. and other heavily-shorted or out-of-favor stocks. Macerich shares jumped 68% in four trading sessions and reached about $26 at one point on Wednesday on frenetic volume — allowing Ontario Teachers to get out.
U.S. consumer spending fell 0.2% in December, though a 0.6% rise in household incomes could prime the economy for growth this year, the Wall Street Journal reported. Household spending fell for the second straight month, the Commerce Department said Friday. Consumers cut spending broadly on goods and services. Incomes, meanwhile, rose for the first time in three months, in part because of government aid programs, such as enhanced unemployment benefits, that kicked in at the end of the year. The increase in income has given households money to spend, but they have had limited ways to spend it. The savings rate rose to 13.7%, far higher than the pre-pandemic level. While government aid programs, a booming stock market and rising home values have put households on solid footing financially, consumers haven’t been able or willing to dine out, go to concerts or on vacation. Late last year, many state and local governments forced businesses to shut down again or scale back operations to combat another wave of the coronavirus. Many households are still suffering. The jobless rate of 6.7% in December is far higher than the February level of 3.5%. Many businesses have closed. But households collectively saved $1.4 trillion in the first nine months of last year, about twice as much as what they saved in the same period a year earlier, according to Berenberg Economics. Most received one-time cash payments of $1,200 last year as part of a broad federal package to help them weather the economic downturn. Millions of unemployed workers also received enhanced unemployment benefits—$600 a week at one point, on top of their normal jobless compensation.
In the battle against COVID-19, governments around the globe are on the cusp of becoming more indebted than at any point in modern history, surpassing even World War II, Bloomberg News reported. From Germany to Japan, Canada to China, fiscal authorities have spent vast sums protecting their people and defending their economies from the colossal toll of the pandemic. At the same time corporations, emboldened by unprecedented government support for markets, are selling bonds like never before. The borrowing binge has come with a hefty price tag — $19.5 trillion last year alone, according to Institute of International Finance estimates. Still, compared to the alternative — a deep and lasting depression — that looks cheap. In a world where rock-bottom interest rates have kept debt costs manageable, it’s also affordable. But if rates rise faster and higher than expected, the end of the COVID-19 crisis could mark the beginning of a reckoning. Federal Reserve Chairman Jerome Powell said that huge borrowing by governments and corporations during the pandemic served as a “bridge” across the economic chasm of lockdowns, plunging consumer spending, idled cruise ships, vacant hotels, and millions of lost jobs. It allowed companies to pay the employees they didn’t fire and maintain assets in working condition. It funded jobless benefits for those who were fired, so they could pay rent and buy food. The bills run up in the fight against the coronavirus vary greatly from country to country. Developed nations, with easier access to capital markets, have spent more to shore up their economies, while emerging-market governments have had to do so with fewer resources. If government borrowing is a bridge to recovery, central banks are the supports. By slashing interest rates and buying more than $5 trillion of assets, they have allowed countries to borrow at a breakneck pace. The Fed alone has added about $3 trillion to its balance sheet over the past year, similar in magnitude to its total monetary expansion in the decade following the 2008 financial crisis.
The Biden administration will provide debt-relief measures for more than 12,000 financially distressed farmers, Bloomberg News reported. The U.S. Department of Agriculture will temporarily suspend past-due debt collections and foreclosures for farmers borrowing under two major loan programs administered by the Farm Service Agency, administration officials said. The measure is designed to help farmers hit by the coronavirus pandemic and economy’s slump with about 10% of borrowers qualifying. “USDA and the Biden Administration are committed to bringing relief and support to farmers, ranchers and producers of all backgrounds and financial status, including by ensuring producers have access to temporary debt relief,” Robert Bonnie, the department’s deputy chief of staff, said in a statement. The government is evaluating ways to improve and address borrowing to keep farmers “earning living expenses, providing for emergency needs and maintaining cash flow,” Bonnie said. The USDA will temporarily suspend non-judicial foreclosures and wage garnishments and halt referring foreclosures to the Justice Department. The department will also seek to stop foreclosures and evictions already in progress. The administration plans to keep the debt-relief measures in place until the COVID-19 emergency ends, the officials said.
Federal Reserve Chairman Jerome Powell said Wednesday that the U.S. economy still faces “considerable risks” driven by the coronavirus pandemic and waived off concerns that further fiscal support could boost inflation, The Hill reported. While Powell said that the U.S. economy is ripe for a strong second half, he warned that the pace of COVID-19 vaccinations and the arrivals of new variants still pose serious threats to millions of Americans who are struggling to get by amid the pandemic. “We're a long way from a full recovery,” Powell told reporters during a news conference shortly after the Fed announced it would hold interest rates steady and continue purchasing $120 billion each month in Treasury and mortgage bonds. “Something like 9 million people remain unemployed as a consequence of the pandemic,” he continued, noting a total equal to the peak of the job losses during the Great Recession in 2009. “Many small businesses are under pressure and there are other needs to be addressed, and the path ahead is still pretty uncertain," he added. Powell’s comments come amid growing Republican opposition to President Biden’s push for a $1.9 trillion coronavirus relief and economic aid bill. While Democrats have unified around the measure, Republicans have shown little interest in passing another massive stimulus bill less than a month after former President Trump signed a $900 billion measure.
Belk Inc., the department store chain owned by Sycamore Partners, will seek to complete an upcoming reorganization in bankruptcy court in a single day, Bloomberg News reported. The retailer will file its chapter 11 petition in the Southern District of Texas in late February. Belk on Tuesday disclosed its plans to cut debt and raise new capital to continue operating, and it aims to wrap up the court process by the next day. The urgency stems from concern over business interruptions during the bankruptcy process, which can spook vendors and customers. The quick turnaround should benefit from Belk’s work in recent weeks to get lenders on board with its restructuring plan before it filed. Equity Stake The company’s plans are subject to factors including judicial discretion, and elements could change. A 24-hour turnaround in court would put Belk in rare company, alongside recent record-breakers like online retailer Fullbeauty Brands Inc. and technology company Sungard Availability in 2019. The restructuring plan involves handing 49.9% of the company’s equity to its lenders, with parent Sycamore retaining a 50.1% stake in exchange for supplying up to $100 million of a new $225 million loan to the company.
After months of fighting to avoid bankruptcy, cinema giant AMC Entertainment Holdings Inc. rode Wednesday’s trading frenzy to a triple-digit share rise, opening a window for the company to exploit the speculative mania to help survive the pandemic, WSJ Pro Bankruptcy reported. The movie theater chain’s shares catapulted 300% on Wednesday as revved-up retail traders bet on AMC as the next meme stock, cheered by posters on the Reddit forum WallStreetBets where newbie investors gathered to encourage each other to fuel GameStop Corp.’s dizzying rally. “AMC is clearly next,” one poster wrote Wednesday, adding several rocket ship emojis. “Double down AMC wooo,” another user said. The company has spent months vying to stay afloat, unable to open its movie theaters to full capacity because of the coronavirus pandemic and starved of fresh content by Hollywood studios that began releasing flicks straight to streaming. Burning cash at a rate of roughly $100 million a month, AMC last month began selling stock to the public with a bankruptcy warning attached, saying that a failure to raise enough capital could mean chapter 11.
A collapse in apartment rent collection during the pandemic is forging one of New York’s most unlikely political alliances, the Wall Street Journal reported. The Real Estate Board of New York, the property industry’s main lobbying group, has joined with New York’s Legal Aid Society, a nonprofit association that advocates on behalf of tenant rights. While these two groups are usually antagonists — and they are currently on opposite sides in a federal lawsuit over rent control — the pandemic has created common ground. Too many New York tenants can’t pay rent right now, which is making it harder for landlords to pay back their loans and causing tenant debt to pile up. Both sides want to address the issue with more government action, mostly in the form of streamlined rental assistance. Asking rents for one-bedroom apartments Manhattan have fallen almost 20% over the past year, according to listings website Zumper, after a number of renters fled the city for cheaper accommodations or more space while working from home during COVID-19. Many of those who stayed have fallen behind on their rent payments. A recent survey estimated that New York tenants may now be more than $2 billion in debt to their landlords. The joint industry and tenant lobbying effort includes other housing groups and goes by the name of “Project Parachute.” It was first organized by Enterprise Community Partners, Inc, an affordable housing nonprofit. It has been pressing its case with elected officials, such as state Sen. Brian Kavanagh, the chair of the state Senate’s housing committee.
A pilots' union for Mexico's Grupo Aeromexico said it had accepted cuts amounting to $350 million on collective bargaining pacts in negotiations required for the airline to win a second tranche of bankruptcy financing, Reuters reported. The Association of Airmen Pilots (ASPA) voted to accept the reduction over the next four years to support the firm's financial restructuring, it said in a statement. Salary cuts for pilots ranged between 5% and 15%, while 79 pilots facing job cuts will be compensated under the agreement. The pilots also accepted fewer benefits, the union added. Aeromexico filed for chapter 11 protection in a U.S. court in June, after the coronavirus pandemic slammed the global travel industry. The carrier was approved for up to $1 billion in debtor-in-possession (DIP) financing, and received an initial $100 million payment in September. The company said in December it had completed negotiations with two other unions.
