AMC stock drops on equity distribution agreement and liquidity update; Parsley Energy rises on merger talks; Equinox weakens on advisory hire — Mid-Day Commentary

AMC Entertainment’s equity dropped more than 10% after a multi-pronged announcement this morning that included a warning that the company could entertain in-court or out-of-court restructuring of its liabilities in the event that it exhausts its sources of liquidity. The shares traded today at USD 3.16 and a USD 346m market cap, from yesterday’s close of USD 3.50 per share.  

The company additionally reported that it had USD 417.9m in cash and cash equivalents as of 30 September and has raised USD 54.7m through an ATM stock offering of USD 15m shares since then. But with a cash burn of roughly USD 115m per month, it will deplete its liquidity cushion by early 2021, at the latest, as reported

AMC’s USD 500m 10.5% first lien notes due 2025 traded this morning at 61.75 to yield 25%, roughly in line with the last institutional trade of 61.5 on 16 October, according to MarketAxess

Meanwhile, its USD 1.4bn 12% PIK second lien notes due 2026 traded at 9 this morning after closing yesterday at 9.5, said the trader. Half the coupon is in cash and the first cash payment is due on 15 December, noted the trader. 

“They are open but not showing movies,” said a second buysider. “It’s a worst-case scenario. Their theaters are open but if their theaters are closed, at least they won’t pay rent so it slows the cash burn.” 

Parsley Energy’s bonds traded up today on reports that Pioneer Natural Resources is in talks to purchase Parsley. The shale producers could combine via an all-stock transaction by the end of the month, according to the Wall Street Journal

The deal follows at least two other recent sizeable deals in the oil and gas space. ConocoPhillips yesterday (19 October) announced its USD 9.7bn agreement to buy Concho Resources, while Devon Energy agreed last month to merge with WPX Energy for USD 5bn.  

Parsley’s USD 400m 4.125% senior unsecured notes due 2028 traded today at 103.75 to yield 3.187%, up from trades at 99.75 to yield 4.164% yesterday (19 October), according to MarketAxess. The USD 700m 5.625% senior unsecured notes due 2027 traded today at 106.625 to yield 3.516%, up from trades at 103.25 to yield 4.885% yesterday. 

Parsley’s stock traded up 3.47% on the day to USD 10.44 per share and a market cap of USD 4.322bn. Pioneer’s stock traded today at USD 82.38 per share and a market cap of USD 13.533bn, down 5.36% from yesterday’s close.

Equinox’s loans weakened this morning following the Debtwire report yesterday that the fitness company hired Centerview Partners to help evaluate options to insulate its balance sheet from the effects of the pandemic. 

The company is also working with Kirkland & Ellis while a group of lenders has retained Akin Gump. 

As the fitness industry struggles with closures related to coronavirus, Equinox raised a pricey USD 150m Libor +900bps (1%) first lien TLB-2 in June for general corporate purposes. The loan is pari passu to the USD 998m Libor+ 300bps (1% floor) TLB due 2024.  

The TLB due 2024 is quoted 75.773/77.5 context this morning compared to 76.125/78.042 yesterday, according to Markit. The company’s USD 200m L+ 700bps (1% floor) second lien term loan due 2024 is quoted at 57.9/61.875 from 58.531/62.344 yesterday.   

In the new issue space, Chobani’s USD 425m 4.75% senior secured notes due 2028 gained over a point after pricing at par yesterday, to change hands today at 101.25 for a 4.438% yield, according to MarketAxess.  

The company will also allocate a USD 400m TLB due 2027 at Libor+ 350bps (1% floor) and 99.25 OID today. Proceeds from both deals will be used to refinance existing loans and repay other debt. 

2020 Debtwire

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