Silver Lake Scores $113 Million on AMC Stake Amid Reddit Rally

Silver Lake Management exited its equity stake in AMC Entertainment Holdings Inc., generating around $113 million after converting bonds to equity and selling the shares as the movie theater chain’s stock rallied.

The private equity firm converted $600 million of 2.95% bonds to equity at a price of $13.51 a share, according to a regulatory filing Friday. It then sold the 44.4 million shares for an average price of $16.05 during a Reddit-fueled rally in the company’s stock, according to calculations by Bloomberg. The gains disclosed Friday don’t include any possible offsets from hedging.

A representative for Silver Lake didn’t immediately respond to messages seeking comment after normal business hours.

Silver Lake provided millions of dollars in financing to the troubled theater chain in recent months as it has struggled to stay afloat amid the pandemic. The Menlo Park, California-based firm was the majority holder of AMC’s convertible notes due 2026.

Once-risky debt investments are reaping big gains for some credit investors after day traders helped fuel the sudden stock surge in companies like AMC. The cinema company climbed as much as 85% Friday to $16 before closing at $13.26. Silver Lake sold its equity Wednesday, and received as much as $24.14 a share, according to the filing.

Silver Lake Scores $113 Million on AMC Stake Amid Reddit Rally

The move effectively erases $600 million of debt for the embattled theater chain.

AMC, based in Leawood, Kansas, has raised fresh cash in recent weeks as it seeks to manage its debt load and avert a bankruptcy filing. Companies in the entertainment and leisure industries are among those hardest hit by the pandemic, as consumers either elect to stay home or are forced to by government shutdowns.

©2021 Bloomberg L.P.

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