AMC Entertainment sparks theater rally with optimistic reopening plans; NCL loan ticks up on amendment to preserve liquidity – Mid-Day Commentary

AMC Entertainment’s capital stack surged today after the company released official 1Q20 results post-close yesterday. The company had already reported preliminary numbers – including an eye-watering 97% year-over-year collapse in adjusted EBITDA – but the big takeaway was the movie theater operator’s announcement that it plans to reopen all US and UK theaters in July, according to two buyside analysts.

Whether the timeline is too optimistic or if enough customers will return remains to be seen. But in response to the news, AMC’s USD 595m 5.875% senior subordinated notes due 2026 leapt 10 points this morning to 43 yielding 23%, while its USD 600m 5.75% senior subordinated notes due 2025 jumped eight points to 42 yielding 27%. The issuer’s USD 475m 6.125% senior subordinated notes due 2027 gained six points to 41 to yield 24%, according to MarketAxess. 

Meanwhile, quotes on its USD 2bn Libor+ 300bps term loan due 2026 strengthened slightly, to the 78.2/80.6 context, from 77.6/80 yesterday, according to Markit. 

AMC Entertainment’s stock rose to USD 6.48 today, from USD 5.99 yesterday, and it has a market cap of USD 675m. 

AMC’s positive note also lifted comps including Cinemark bonds, said one of the buyside analysts. Cinemark’s USD 400m 5.125% senior unsecured notes due 2022 firmed this morning to 97 yielding 6.1%, up from 96.25 and a 6.7% yield yesterday. The company reported earnings last Wednesday (3 June). It too expects to open theaters starting 19 June, according to the press release. 

Cinemark’s equity bucked the trend, dropping 3% today to USD 16.83, with a market cap of USD 2.087bn, from USD 18.16 at market close yesterday. It is, however, up from USD 15.95 the day before it reported earnings last week.

Norwegian Cruise Lines’ loan facility ticked up today as the cruise liner disclosed that it amended its credit facilities, according to an analyst and a trader.

The amendments include deferred amortization payments, suspension of financial covenant testing and the addition of restricted payment and incurrence covenants, according to the company’s SEC filings. These changes are expected to result in USD 156m of incremental liquidity.

NCL’s USD 1.6bn L+ 150bps TLB due 2024 ticked up today to the 79/83.667 context from 77/82 yesterday, according to Markit.

United Natural Foods’ loan strengthened slightly as the food wholesaler reported strong results for the quarter ended 2 May, according to an analyst. 

Adjusted EBITDA for the company’s fiscal 3Q20 totaled USD 222m, up 32% year-over-year from USD 168.2m. Net sales totaled USD 6.67bn, compared to USD 5.96bn in 3Q19. The company also increased its full year 2020 outlook for adjusted EBITDA to USD 655m-USD 670m from previous guidance of USD 520m to USD 560m.

The company’s USD 1.8bn L+ 425bps term loan due 2022 was quoted today at 96.25/97.167, up from the 95.286/96.446 context yesterday, according to Markit. 

JetBlue‘s stock opened lower today at USD 13.32, with a market cap of USD 3.458bn, down from USD 14.32 at yesterday’s close following the announcement this morning that the company is seeking a USD 500m four-year term loan backed by terminal slots. Price talk on the term loan, led by Barclays, is L+ 575bps-600bps with a 97 OID.

JetBlue isn’t the only airline angling to tap the debt markets this week. Delta Air Lines launched a drive-by deal this morning for a benchmark-sized unsecured bond due 2026 to pay back debt, with pricing guided in the 8% area

Delta’s existing bonds had a mixed reaction, with its USD 3.5bn 7% senior secured notes due 2025 up slightly at 106.75 versus yesterday’s close of 106, but lower than levels for most of this week in the 107-108 range, according to MarketAxess. Several classes of unsecured notes were rangebound, in line with levels over the past few days.

Delta’s stock fell 6% today to USD 29.00 after closing yesterday at USD 34.14. Its market cap is USD 20bn.

The company was in the debt markets as recently as April when it placed a USD 1.5bn L+ 475bps term loan due 2023, and separately, the secured notes due 2025.

2020 Debtwire

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