More Cracks Forming in AMC Entertainment's Foundation
In retrospect, it comes as little surprise that owners of debt issued by movie theater chain AMC Entertainment (NYSE: AMC) aren't jumping at the chance to exchange their current holdings for newly issued paper. Doing so would effectively lock in a near-halving of the principal amounts they initially invested; in some cases it could weaken their legal claim on any assets should the organization be forced into bankruptcy. At least by holding onto the bonds they already own, there's a fighting chance they could reclaim some of their unrealized losses without giving anything up to do so.
On the other hand, it matters little at this point. Given AMC's struggle and resulting fiscal position, nobody's likely to come out a winner. Debtholders are simply maneuvering (or not maneuvering) in an effort to lose the least.
It should concern shareholders, not because they're always at the bottom of the liquidation totem pole, but because it's another hint that AMC Entertainment is increasingly desperate.
Source Fool.com