US cinema chain AMC Entertainment said it did not reach an agreement to acquire some of the now-bankrupt rival Cineworld’s assets, Reuters reported. The news boosted AMC’s shares up more than 1.1% in premarket trading.
AMC and Bankrupt Rival Cineworld Fail to Reach an Acquisition Deal
AMC Entertainment scrapped its plans to acquire the Cineworld Group, the movie theater chain that announced bankruptcy at the end of October. The reports sent AMC’s stock up 1.1% in pre-open Wednesday.
According to AMC, earlier talks with certain lending firms were focused on the buyout of some of Cineworld’s theater assets across the US and Europe. The acquisition was supposed to be funded through the issuance of preferred shares and debt financing provided by the lenders.
The move comes several weeks after Cineworld announced a bankruptcy settlement with its lenders and landlords, paving the way for the world’s second-biggest cinema chain operator to borrow capital and repay $1 billion worth of debt. Cineworld then agreed to explore sale options and discuss business plans with its creditors as part of its bankruptcy deal.
US Bankruptcy Judge Marvin Isgur in Houston said the settlement represented a “pretty amazing” outcome given the backlash Cineworld received from landlords and creditors over its bankruptcy financing. Creditors submitted 15 complaints to the loan in court, while a dozen were resolved before they were filed with the court, said Cineworld attorney Christopher Marcus.
“This order isn’t perfect but is a very commercially reasonable result.”
– attorney Robert LeHane said.
No Guarantees that AMC and Cineworld Could Restart Talks
While AMC reserves the right to restart talks of a potential acquisition of Cineworld’s assets, there are no guarantees that the discussions will resume, for now, the cinema chain said in an 8-K filing. AMC, which gained in popularity during the meme-stock craze last year, planned to fund its buyout through the issuance of its APE units and debt financing provided by Cineworld’s lenders.
AMC noted that Cineworld did not disclose any confidential or non-public information during the talks, nor did it provide compilations, forecasts, analyses, and other documents to the lenders.
AMC’s stock sharply dropped earlier this week to the lowest level since the meme-stock frenzy started in January 2021. The company’s shares are down more than 80% this year at around $5.08 per share.
The cinema chain failed to impress in the stock market this year even after reporting strong earnings results in the fiscal Q4 2021. Most of the meme stocks that saw unprecedented gains last year have dropped significantly this year amid tough macroeconomic conditions.
This article originally appeared on The Tokenist
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