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2021-12-01

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Why I'm Buying AMC's Debt<blockquote>我为什么要购买AMC的债务</blockquote>

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{"i18n":{"language":"zh_CN"},"detailType":1,"isChannel":false,"data":{"magic":2,"id":603365171,"tweetId":"603365171","gmtCreate":1638367795908,"gmtModify":1638367920158,"author":{"id":4099627780862330,"idStr":"4099627780862330","authorId":4099627780862330,"authorIdStr":"4099627780862330","name":"Adinn","avatar":"https://static.tigerbbs.com/c440367559652b7f45d7223115272455","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":11,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":1,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body>Too long...can you summarise the content?</body></html>","htmlText":"<html><head></head><body>Too long...can you summarise the content?</body></html>","text":"Too long...can you summarise the content?","highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/603365171","repostId":1125581925,"repostType":4,"repost":{"id":"1125581925","kind":"news","pubTimestamp":1638366944,"share":"https://www.laohu8.com/m/news/1125581925?lang=zh_CN&edition=full","pubTime":"2021-12-01 21:55","market":"us","language":"en","title":"Why I'm Buying AMC's Debt<blockquote>我为什么要购买AMC的债务</blockquote>","url":"https://stock-news.laohu8.com/highlight/detail?id=1125581925","media":"Seeking Alpha","summary":"Summary\n\nAMC has recently been able to capitalize heavily on its ‘meme stock’ status and shored up i","content":"Summary<blockquote>总结</blockquote> <ul> <li>AMC has recently been able to capitalize heavily on its ‘meme stock’ status and shored up its cash position rather substantially.</li> <li>AMC has been recovering well in the past few months and is set to return to profitability next quarter.</li> <li>While there is still a ways to go before it is in a healthy cash position, AMC is in a suitable position to justify investing in its bonds.</li> <li>AMC was in dire need of capital in the early stages of the pandemic, so it sold bonds with high yields and coupon rates in order to attract creditors.</li> <li>Now that the company has been able to reduce its risk of defaulting, investors can take advantage of these high-yield, underpriced loans with a bit more confidence.</li> </ul> <img src=\"https://static.tigerbbs.com/36eaf0afdfff7e41320877f345125b8c\" tg-width=\"1536\" tg-height=\"1034\" width=\"100%\" height=\"auto\">Mario Tama/Getty Images News<blockquote><ul><li>AMC最近能够大量利用其“模因股票”地位，并大幅支撑其现金头寸。</li><li>AMC在过去几个月中恢复良好，预计下个季度将恢复盈利。</li><li>尽管距离拥有健康的现金状况还有很长的路要走，但AMC处于合适的位置来证明投资其债券的合理性。</li><li>AMC在疫情初期急需资金，因此出售高收益率和票面利率的债券，以吸引债权人。</li><li>既然该公司已经能够降低违约风险，投资者就可以更有信心地利用这些高收益、低价贷款。</li></ul>马里奥·塔玛/盖蒂图片社新闻</blockquote> Earlier this year, as I’m sure most readers are aware, AMC Entertainment(NYSE:AMC)got caught up in the ‘Wall Street Bets’ mania that took the retail investor crowd by storm. Reaching a peak of $72.62 back in June, AMC is now a ways off of its height but is still trading at a fairly elevated level of $33.94 (at the time of article submission). This isn’t an article meant to analyze if this new price is the new norm, I don’t really think that there’s a case to be made that it is. Instead, I’ll be looking at some of AMC’s available bonds, in increasing order of security, and why I believe they’re some of the most attractive securities on the market right now, especially for income investors.<blockquote>今年早些时候，我相信大多数读者都知道，AMC院线（纽约证券交易所股票代码：AMC）陷入了席卷散户投资者的“华尔街押注”热潮。AMC在6月份达到了72.62美元的峰值，现在距离顶峰还有很长的路要走，但仍处于33.94美元的相当高的水平（在提交文章时）。这不是一篇旨在分析这个新价格是否是新规范的文章，我真的不认为有理由证明它是。相反，我将按照安全性递增的顺序研究AMC的一些可用债券，以及为什么我认为它们是目前市场上最具吸引力的证券，尤其是对于收益投资者来说。</blockquote> Likelihood of Payout<blockquote>支付的可能性</blockquote> Before I look at the bonds themselves, understanding the security, or potential lack thereof, that they offer is important. Having&nbsp;lost $4.6 billion&nbsp;last year, and $149 million before the COVID era, it may seem ludicrous to even consider the fact that AMC is a good bet for creditors. However, the company took full advantage of its “meme stock” status and has raised significant funds off the back of its incredibly inflated valuation.<blockquote>在我研究债券本身之前，了解它们提供的安全性或潜在的安全性是很重要的。去年损失了46亿美元，而在新冠疫情爆发之前损失了1.49亿美元，甚至考虑到AMC对债权人来说是一个不错的选择这一事实似乎也很可笑。然而，该公司充分利用了其“模因股票”的地位，并在其令人难以置信的高估值的支持下筹集了大量资金。</blockquote> Even before the company earned its meme status, AMC had raised&nbsp;$917 million&nbsp;from mid-December to late January. $506 million of this came from the sale of new equity and the company was able to convert $100 million in second-lien debt into equity as well. AMC was alsoable to convert $600 million&nbsp;in senior notes held by Silver Lake into equity. The company has also raisedmore than $1 billion&nbsp;from April and November of the previous year through equity and debt raises, as well as “a modest amount of asset sales.” These early capital raises enabled AMC to become a bit better-equipped to handle its existing debt load in light of the previous year’s poor performance. However, all of this together still wasn’t really enough.<blockquote>甚至在该公司获得模因地位之前，AMC就已经从12月中旬到1月底筹集了9.17亿美元。其中5.06亿美元来自出售新股权，该公司还能够将1亿美元的第二留置权债务转换为股权。AMC还能够将Silver Lake持有的6亿美元优先票据转换为股权。从去年4月到11月，该公司还通过股权和债务融资以及“少量资产出售”筹集了超过10亿美元。鉴于上一年的糟糕表现，这些早期融资使AMC能够更好地处理其现有的债务负担。然而，所有这些加在一起仍然不够。</blockquote> Then, late in January, things changed rapidly for the struggling movie giant. Trading at around $5 on January 26, shares would rise to about $20 the following day. While they would soon retreat from such highs, shares sustained an elevated level of trading until late May came around and shares broke the $60 barrier in a matter of days. This new price presented AMC with a golden opportunity.<blockquote>然后，在一月底，这家苦苦挣扎的电影巨头的情况迅速发生了变化。1月26日股价约为5美元，第二天股价将上涨至20美元左右。虽然股价很快就会从这样的高点回落，但股价一直保持较高的交易水平，直到5月底，股价在几天内就突破了60美元大关。这个新价格为AMC提供了一个千载难逢的机会。</blockquote> While the company waited a little to fully seize the opportunity,AMC raised&nbsp;a total of $1.246 billion in the second quarter. All in equity. With such an elevated stock price, AMC was able to raise far more money than they would’ve been able to previously and at a far lower level of dilution. After this more aggressive round of funding, AMC’s CEO, Adam Aron, said of the raise “[it has] substantially strengthen[ed] and improv[ed] AMC’s balance sheet, providing valuable flexibility to respond to potential challenges and capitalize on attractive opportunities in the future.” The last part of this I find particularly interesting, as it implies that AMC may even have some excess capital to invest if a particularly attractive opportunity presents itself. While I’m not sure if AMC is quite in the position to begin spending money on new opportunities again, it does speak towards the confidence in the company’s current capital structure.<blockquote>就在该公司等待了一段时间才完全抓住机会的同时，AMC在第二季度共筹集了12.46亿美元。都是公平的。在股价如此高的情况下，AMC能够以低得多的稀释水平筹集到比以前更多的资金。在这一轮更激进的融资之后，AMC首席执行官亚当·阿伦(Adam Aron)在谈到此次融资时表示，“它大大加强了AMC的资产负债表，为应对潜在挑战和利用有吸引力的机会提供了宝贵的灵活性在未来。”我觉得最后一部分特别有趣，因为它意味着如果出现特别有吸引力的机会，AMC甚至可能有一些多余的资本可供投资。虽然我不确定AMC是否有能力再次开始在新机会上花钱，但这确实表明了人们对公司当前资本结构的信心。</blockquote> Even before this incredible capital raise, Mr. Aron was rather pleased with the company’s standing,saying: “I am optimistic and confident about AMC’s ability to weather this COVID-19 storm. Our focus is no longer on survival.” The executive’s remarks, made in March, even came before AMC’s strongest rally in the stock market. This level of confidence, coming before the company’s largest capital raise, provides even further reassurance. But enough of this discussion of sentiment. With all of this recent movement, what exactly is AMC’s cash position?<blockquote>甚至在这次令人难以置信的融资之前，Aron先生就对公司的地位相当满意，他说：“我对AMC度过这场COVID-19风暴的能力感到乐观和信心。我们的重点不再是生存。”这位高管在3月份发表的言论甚至是在AMC股市最强劲反弹之前发表的。在该公司最大规模的融资之前，这种程度的信心提供了进一步的保证。但是关于情绪的讨论已经够多了。鉴于最近的所有这些变动，AMC的现金状况到底是多少？</blockquote> <img src=\"https://static.tigerbbs.com/f42c5be344a583c11229ebdc7cda4973\" tg-width=\"814\" tg-height=\"491\" width=\"100%\" height=\"auto\"><blockquote></blockquote> <img src=\"https://static.tigerbbs.com/fae8632ca98e5f7c7bcae4dab18268aa\" tg-width=\"831\" tg-height=\"491\" width=\"100%\" height=\"auto\">Source: Author’s Calculations via Bloomberg Terminal<blockquote>资料来源：作者通过彭博终端的计算</blockquote> Examining the company’s liquidity ratios, AMC unsurprisingly isn’t terribly well-positioned. The company’s current ratio, which measures current assets versus current liabilities, has trended below one since data is available. The quick ratio, which excludes inventory from the measure, has never reached 1 for as far back as public data goes. While inventory is typically considered rather liquid, it can require significant time to convert into cash, hence the ‘quick’ liquidity ratio. A ratio of 1 or above signifies that a company’s easily liquidable assets are able to cover all of its short-term debt obligations. As AMC does not have a current ratio, or quick ratio for that matter, above this mark, it cannot simply rely on easy liquidation and current cash to cover its short-term liabilities.<blockquote>检查该公司的流动性比率，毫不奇怪，AMC的地位并不是很好。自有数据以来，该公司的流动比率（衡量流动资产与流动负债的比率）一直低于1。自公开数据以来，将库存排除在衡量标准之外的速动比率从未达到1。虽然库存通常被认为具有相当大的流动性，但它可能需要很长时间才能转化为现金，因此具有“快速”流动性比率。比率为1或以上表明公司的易变现资产能够偿还其所有短期债务。由于AMC的流动比率或速动比率不高于这一水平，因此它不能简单地依靠轻松清算和流动现金来偿还短期负债。</blockquote> Similarly, looking at the company’s debt to asset ratio, we can see that debt dramatically outweighs the company’s assets. Looking at the historical ratios for AMC, we can see that this isn’t anything that new either. While this, unsurprisingly, increased a lot over 2020, the company has a historically high debt to equity ratio. This signals that AMC has largely relied on debt throughout its lifetime to grow its assets. This heavy use of debt is the main culprit behind AMC’s current weak capital position and&nbsp;concerns of bankruptcy&nbsp;last year. Though, the fact that this is nothing new should tell investors that a high debt to asset ratio isn’t inherently a bad thing. The theatre business is a very capital-intensive business and not utilizing debt in this manner would make expansion incredibly difficult.<blockquote>同样，看看公司的资产负债率，我们可以看到债务大大超过了公司的资产。看看AMC的历史比率，我们可以看到这也不是什么新鲜事。虽然不出所料，这一数字在2020年大幅增加，但该公司的债务股本比率处于历史高位。这表明AMC在其一生中很大程度上依赖债务来增加资产。这种债务的大量使用是AMC目前资本状况薄弱和去年破产担忧的罪魁祸首。不过，这并不是什么新鲜事，这一事实应该告诉投资者，高资产负债率本质上并不是一件坏事。剧院业务是一项资本密集型业务，不以这种方式利用债务将使扩张变得极其困难。</blockquote> What is noteworthy, however, is exactly how inflated this ratio has become. In 2020, AMC’s debt to equity ratio turned negative for the first time, signaling that the company’s liabilities surpassed its assets. Often, companies in such a predicament face insolvency as they’re faced with an inability to make good on debt obligations. However, this was at the end of 2020. We’ll have to wait for AMC’s full-year report to see how this has changed, though the company’s lowering of debt and dramatic increase in capital through the sale of stock indicates that this should return to a positive for 2021.<blockquote>然而，值得注意的是，这一比率到底变得有多高。2020年，AMC的负债权益比首次转为负值，表明该公司的负债超过了资产。通常，处于这种困境的公司会面临破产，因为它们无法偿还债务。然而，这是在2020年底。我们必须等待AMC的全年报告才能看到这种情况发生了怎样的变化，尽管该公司通过出售股票降低了债务并大幅增加了资本，这表明2021年应该会恢复正值。</blockquote> If we look at the company’s market value to debt ratio, we can see that AMC’s equity position at the moment is incredibly strong as it transitions away from merely struggling to stay afloat. At .63, AMC is actually in a position to be able to fund its debt obligations through equity. That’s down dramatically from the 23.87 from the end of 2020, though still quite a bit above&nbsp;the .1 average&nbsp;for other U.S. firms. The importance here is more in the tremendous decrease over the last eleven months though. We know that AMC isn’t a pinnacle of financial excellence at the moment, that’s the entire reason this article even exists. What is important to note, is that the company’s financial health is rapidly improving.<blockquote>如果我们看看该公司的市值与债务比率，我们可以看到AMC目前的股权状况非常强劲，因为它已经摆脱了仅仅挣扎着维持生存的状态。AMC的利率为0.63，实际上能够通过股权为其债务提供资金。这比2020年底的23.87大幅下降，但仍远高于其他美国公司0.1的平均水平。不过，这里的重要性更在于过去11个月的大幅下降。我们知道AMC目前并不是财务卓越的顶峰，这就是本文存在的全部原因。值得注意的是，公司的财务状况正在迅速改善。</blockquote> I don’t think that there’s much question that AMC will sell more equity before defaulting, as dilution is far less damaging than defaulting on debt would be. AMC&nbsp;has been prioritizing&nbsp;its debt payments throughout its recovery and there’s no reason that it would stop now that it has even greater means to do so. While the majority of these figures don’t necessarily indicate the most financially healthy company, it does demonstrate a company on the mend which I believe has eliminated concerns of insolvency.<blockquote>我认为AMC在违约前出售更多股权没有太大问题，因为稀释的破坏性远小于债务违约。AMC在整个复苏过程中一直优先考虑债务支付，现在它有更好的手段这样做，没有理由停止。虽然这些数字中的大部分并不一定表明财务状况最健康的公司，但它确实表明了一家正在好转的公司，我相信这已经消除了对破产的担忧。</blockquote> One of the main takeaways here is that a high debt load isn’t really anything new for AMC. Yes, right now it’s higher than usual. This was especially true for the end of 2020. Though, with the capital raised from selling more equity, AMC is in a far better place than it previously was. More importantly, AMC was missing the income it usually has to supplement its high level of debt. As consumers return to theatres, this income will begin to return.<blockquote>这里的主要要点之一是，高债务负担对AMC来说并不是什么新鲜事。是的，现在比平时高。2020年底尤其如此。不过，凭借出售更多股权筹集的资金，AMC的处境比以前好得多。更重要的是，AMC失去了通常用来补充高额债务的收入。随着消费者重返影院，这笔收入将开始回归。</blockquote> Return to Normalcy<blockquote>恢复正常</blockquote> Looking at the numbers doesn’t really paint a great picture for AMC. However, the numbers don’t really tell the full story. Operational success is how companies tend to handle these matters and AMC is just starting to exit the most challenging operational environment of its life. As the world gradually begins a return to normalcy, its cash position will improve dramatically.<blockquote>看看这些数字并不能真正为AMC描绘出一幅美好的画面。然而，这些数字并不能真正说明全部情况。运营成功是公司处理这些问题的方式，而AMC刚刚开始退出其一生中最具挑战性的运营环境。随着世界逐渐开始恢复正常，其现金状况将大幅改善。</blockquote> To start this off, let’s take a look at some Seeking Alpha&nbsp;analysis on AMC. In this article, the author focused on how moviegoing is poised for a comeback on the back of multiple highly-successful film debuts. This is bolstered by the fact that companies seem set to return to the norm of exclusive theatrical releases for new movies, as Disney(NYSE:DIS)&nbsp;recently announced&nbsp;it would. Two other articles,on Cineplex&nbsp;and&nbsp;Cinemark, offer similar conclusions.<blockquote>首先，让我们来看看一些Seeking Alpha对AMC的分析。在这篇文章中，作者重点关注了在多部非常成功的电影处女作之后，观影是如何准备卷土重来的。正如迪士尼（纽约证券交易所股票代码：DIS）最近宣布的那样，公司似乎将回归新电影独家影院上映的规范，这一事实支撑了这一点。另外两篇关于Cineplex和Cinemark的文章也给出了类似的结论。</blockquote> In the above articles, authors examine the future of the theatre business and discuss how the companies are on the path to return to profitability. As I agree with the general theses there, being that theatre operators are on their way back to their old form, I believe it’s safe to say that AMC is officially on the road to recovery. Now, I accept that AMC still has some way to go before becoming profitable again, however it is definitely on the mend. Additionally, the pandemic gave AMC the opportunity to make harsh cuts to its business that will ultimately benefit the company’s operational efficiency moving forward.<blockquote>在上述文章中，作者审视了剧院业务的未来，并讨论了这些公司如何走上恢复盈利的道路。由于我同意那里的总体论点，即剧院运营商正在恢复他们的旧形式，我相信可以肯定地说，AMC正式走上了复苏之路。现在，我承认AMC距离再次盈利还有一段路要走，但它肯定正在好转。此外，疫情让AMC有机会大幅削减其业务，这最终将有利于公司未来的运营效率。</blockquote> More recently, AMC released&nbsp;its third quarter earnings. The company lost $244 million off of $763.2 million in revenue. The positive here is that the company’s revenue climbed 71.5% over the previous quarter. Keep in mind that this doesn’t account for high-profile releases in October such as&nbsp;No Time to Dieor the second&nbsp;Venom&nbsp;title. The upcoming&nbsp;Spiderman&nbsp;and&nbsp;Matrix&nbsp;releases should only expedite the company’s recovery in the final quarter of the year. Corporate leadership&nbsp;is currently guiding&nbsp;towards a positive EBITDA for Q4.<blockquote>最近，AMC发布了第三季度财报。该公司营收为7.632亿美元，亏损2.44亿美元。积极的一面是，该公司的收入比上一季度增长了71.5%。请记住，这并不包括10月份高调发布的内容，例如007：无暇赴死或者第二个毒液标题。即将到来的蜘蛛侠和矩阵发布只会加速公司在今年最后一个季度的复苏。公司领导层目前正在引导第四季度实现正的EBITDA。</blockquote> Moving on, let’s take a look at AMC’s net margin through the years. As the figure above demonstrates, AMC’s been churning out an abysmally low net margin pretty consistently for a decade. This is the normal that AMC is working so hard to return to?! After AMC added a tremendous level of expensive debt during the lows of the pandemic, it now needs to do more than just return to normal in order to successfully pay it off.<blockquote>接下来，我们来看看AMC这些年的净利润率。如上图所示，十年来，AMC的净利润率一直很低。这就是AMC努力回归的常态？！AMC在疫情低谷期间增加了巨额昂贵的债务，现在需要做的不仅仅是恢复正常才能成功偿还债务。</blockquote> AMC’s corporate borrowings have risen from $4.753 billion&nbsp;in 2019, to $5.453 billion&nbsp;as of September 30th. The good news, if there is any, is that AMC’s $5.453 billion in corporate borrowings marks a ~$250 million decrease from the $5.716 billion that the company had at the end of 2020. What really caught me by surprise, however, is that&nbsp;the company’s 2020 interest expense on corporate borrowings&nbsp;was only up ~6.22% from 2019. So, although expensive, the ~20.26% jump in total corporate borrowings in the same period indicates that this debt is actually less expensive than the company’s existing debt was.<blockquote>截至9月30日，AMC的企业借款已从2019年的47.53亿美元增至54.53亿美元。好消息（如果有的话）是，AMC的企业借款为54.53亿美元，比2020年底的57.16亿美元减少了约2.5亿美元。然而，真正让我惊讶的是，该公司2020年的企业借款利息支出仅比2019年增长了约6.22%。因此，尽管成本高昂，但同期企业借款总额增长了约20.26%，表明这笔债务实际上比公司现有债务便宜。</blockquote> As AMC begins a return to normalcy, I would expect to see it recover to a healthy interest coverage ratio. Before the pandemic, AMC’s interest coverage ratio was consistently above 5, meaning that its EBITDA could be used to pay off its interest five times over. A mere 6.22% increase in interest expenses means that AMC should be able to recover this important metric with general ease. Essentially, what this demonstrates is that AMC should be able to fully cover its interest expenses with operating revenues as soon as next year.<blockquote>随着AMC开始恢复正常，我预计它将恢复到健康的利息覆盖率。在疫情爆发之前，AMC的利息覆盖率一直高于5，这意味着其EBITDA可以用来偿还五倍的利息。利息支出仅增长6.22%就意味着AMC应该能够轻松恢复这一重要指标。从本质上讲，这表明AMC最快明年就应该能够用营业收入全额支付利息支出。</blockquote> So, with the risk of defaulting on future interest payments looking pretty low, the only major risk remaining is the company’s questionable ability to pay off its debt upon maturity. I don’t mean to downplay the importance of this risk, as it carries the most potential for defaulting, so let’s take a look at how AMC’s return to normalcy will affect its ability to pay off its debt.<blockquote>因此，由于未来利息支付违约的风险看起来相当低，剩下的唯一主要风险是该公司到期后偿还债务的能力值得怀疑。我无意淡化这种风险的重要性，因为它最有可能违约，所以让我们看看AMC恢复正常将如何影响其偿还债务的能力。</blockquote> Mr. Aron discussed in&nbsp;the company’s most recent earnings call&nbsp;that debt, out of all of the issues surrounding AMC for the past two years, was never something that was seriously concerning to him. The company took on a lot of debt during the pandemic though, according to Mr. Aron, it was done “in a smart way.” He explained that there are no maturity dates before 2023, which will only be “a few $100 million worth”, and that the majority of the company’s debt will come due in 2026.<blockquote>阿伦先生在公司最近的收益看涨期权上讨论说，在过去两年围绕AMC的所有问题中，债务从来都不是他严重担心的事情。不过，阿伦先生表示，该公司在大流行期间承担了大量债务，但这是“以明智的方式”完成的。他解释说，2023年之前没有到期日，这将只是“价值几亿美元”，公司的大部分债务将于2026年到期。</blockquote> The major component that Mr. Aron highlighted, however, is that the presence of debt isn’t inherently a bad thing. Of course, high debt loads such as AMC’s aren’t exactly the most healthy in the world, but almost every large corporation in the country carries debt to maximize shareholder returns. With a return to profitability as soon as next quarter, AMC’s operational health is rapidly improving and it can update its debt position to reflect that. The company expects to refinance its debt starting in 2023, lowering its interest payments and pushing back maturity dates. The goal isn’t to completely eliminate debt, rather it is to make debt a more manageable amount. The way the company is currently trending, this seems more than doable.<blockquote>然而，阿伦先生强调的主要因素是，债务的存在本质上并不是一件坏事。当然，像AMC这样的高债务负担并不是世界上最健康的，但该国几乎每家大公司都背负债务以实现股东回报最大化。随着最快下季度恢复盈利，AMC的运营健康状况正在迅速改善，它可以更新其债务状况以反映这一点。该公司预计从2023年开始为其债务进行再融资，降低利息支付并推迟到期日。目标不是完全消除债务，而是让债务变得更容易管理。按照该公司目前的趋势，这似乎是完全可行的。</blockquote> Attractive Bond Offerings<blockquote>有吸引力的债券发行</blockquote> So now that we’ve determined that AMC looks to be fairly reliable in its ability to pay off its debt, it’s time to find the bonds that look the most attractive. I’ve found four high-yield bonds that I believe offer the best investment opportunities,courtesy of Finra. Typically, high-yield bonds are rather risky investments as, in order to convince creditors to lend money, firms must offer a substantial reward. However, I argue that, due to AMC’s dramatically improved cash position, its bonds are unjustly discounted and offer a strong investment opportunity.<blockquote>因此，既然我们已经确定AMC偿还债务的能力看起来相当可靠，那么是时候寻找看起来最有吸引力的债券了。在Finra的帮助下，我发现了四种我认为提供最佳投资机会的高收益债券。通常，高收益债券是风险相当大的投资，因为为了说服债权人放贷，公司必须提供可观的回报。然而，我认为，由于AMC的现金状况显着改善，其债券存在不公平的折扣，并提供了一个强大的投资机会。</blockquote> Beginning with the highest-yielding bond,CUSIP:00165AAH1, the security currently has a yield to maturity of 13.608%. With a coupon rate of 5.75%, paid semi-annually, the appeal here isn’t so much the passive income opportunity, but the overall yield rate. Now, a 5.75% annual coupon rate isn’t too shabby, but the 12.881% yield to maturity is what grabs my attention. Assuming that my above analysis holds true, and AMC is able to pay off its current debt loads, the yield here is pretty strong. However, this bond does carry the highest level of risk with it as an unsecured note.<blockquote>从收益率最高的债券CUSIP：00165AAH1开始，该证券目前的到期收益率为13.608%。票面利率为5.75%，每半年支付一次，这里的吸引力与其说是被动收入机会，不如说是整体收益率。现在，5.75%的年票面利率还不算太差，但12.881%的到期收益率引起了我的注意。假设我的上述分析成立，并且AMC能够偿还当前的债务负担，那么这里的收益率相当强劲。然而，这种债券作为无担保票据确实具有最高水平的风险。</blockquote> The second highest-yielding bond,CUSIP:00165CAP9, does hold a noteworthy advantage over the previously discussed CUSIP:00165AAH1 bond. While its yield to maturity is slightly lower, at 11.294%, it is a second lien note. This is the second-highest bond priority ranking and, even more importantly, is ensured. If AMC were to default on its payments, the value of the loan has been secured by collateral. This would force the sale of assets in order to ensure that loan-holders receive their payments. Now, as a second lien note holder, owners aren’t guaranteed to receive the entire value of their loan in the case of the company defaulting, but they will at least receive a fraction. You will be paying for this heightened security a bit via the slightly lower yield rate, especially as its maturity date is a full year later, on June 6th, 2026. However, with a coupon rate of 12%, paid semi-annually, the moderately guaranteed income that the bond can provide is incredibly attractive. The bond is currently trading just below its price at maturity of $1,000, at $983.90.<blockquote>第二高收益债券CUSIP：00165CAP9确实比之前讨论的CUSIP：00165AAH1债券具有显着的优势。虽然其到期收益率略低，为11.294%，但它是第二留置权票据。这是第二高的债券优先级，更重要的是，这是有保证的。如果AMC拖欠还款，贷款的价值将由抵押品担保。这将迫使出售资产，以确保贷款持有人收到付款。现在，作为第二留置权票据持有人，在公司违约的情况下，业主不能保证收到全部贷款价值，但他们至少会收到一小部分。您将通过略低的收益率为这种增强的证券支付一点费用，特别是因为它的到期日是一整年后的2026年6月6日。然而，该债券的票面利率为12%，每半年支付一次，所能提供的适度保证收入极具吸引力。该债券目前的交易价格略低于1,000美元的到期价格，为983.90美元。</blockquote> If you’re after the full security that a first lien note would offer, there are also a couple of good options. However, keep in mind that you will be paying an even greater premium for this security. Both,CUSIP:00165CAN4&nbsp;and&nbsp;CUSIP:00165CAR5, have yield to maturity rates that are in the 6% range. The first of the two, CUSIP:00165CAN4, matures on April 15th, 2025 and has a yield to maturity rate of 7.905%. The second of the two expires the following year on April 24th, with a yield to maturity rate of 7.844%. Both are trading slightly above their price at maturity of $1,000, with CUSIP:00165CAN4 at $1072.50 and CUSIP:00165CAR5 at $1,054.90 and $1,060 respectively. Both bonds also have a coupon rate of 10.5%, paid semi-annually, representing a rather strong source of, consistent, secured income. Assuming the company doesn’t go bankrupt before the maturity dates, which is seeming incredibly unlikely at this point, the return on these bonds is rather attractive.<blockquote>如果你想要第一留置权票据所提供的全部担保，也有几个不错的选择。但是，请记住，您将为这种证券支付更高的溢价。CUSIP：00165 CAN 4和CUSIP：00165CAR5的到期收益率均在6%范围内。两者中的第一个是CUSIP：00165CAN4，于2025年4月15日到期，到期收益率为7.905%。两者中的第二只于次年4月24日到期，到期收益率为7.844%。两者的交易价格均略高于1,000美元的到期价格，CUSIP：00165CAN4分别为1072.50美元，CUSIP：00165CAR5分别为1,054.90美元和1,060美元。这两种债券的票面利率均为10.5%，每半年支付一次，是相当强大的、持续的、有保障的收入来源。假设该公司不会在到期日之前破产（目前这似乎不太可能），这些债券的回报相当有吸引力。</blockquote> So, how did these incredibly attractive offerings even come to exist in the first place? Well, the CUSIP:00165CAP9 bond was issued in late 2020, a time where AMC was struggling tremendously and there weren’t any murmurs of a ‘meme stock’ rally on the horizon. At that point, a 12% coupon rate compounded semi-annually looked about the only way the company could convince creditors to loan money. CUSIP:00165CAN4 and CUSIP:00165CAR5, the two first lien notes, were also issued in mid- to late-2020 and, for the same reasons, were offered at attractive loaning figures to try and make up for the immense risk they carried. CUSIP:00165AAH1 was first offered in 2016, hence its lower coupon rate, but still shares one of the most important figures with the other loans -- a terrible rating. However, these ratings were given before AMC had been able to strengthen its cash position and no longer represent the company’s ability to make good on its debt payments. Even still, the low ratings keep the bonds out of mind for a majority of investing tools and, therefore, keep interest low. Additionally, the fact that AMC has performed&nbsp;better than expected&nbsp;in its past quarterly two earnings reports demonstrates that the Street still seems to be underestimating the pace of recovery. Hence, an opportunity is born.<blockquote>那么，这些极具吸引力的产品最初是如何产生的呢？嗯，CUSIP：00165CAP9债券是在2020年底发行的，当时AMC陷入了巨大的困境，而且没有任何关于“模因股票”即将上涨的传言。当时，每半年复利12%的票面利率似乎是该公司说服债权人贷款的唯一方法。CUSIP：00165CAN4和CUSIP：00165CAR5是前两张留置权票据，也于2020年中后期发行，出于同样的原因，以有吸引力的贷款数字提供，以试图弥补它们所承担的巨大风险。CUSIP：00165AAH1于2016年首次发行，因此其票面利率较低，但仍与其他贷款共享最重要的数字之一——糟糕的评级。然而，这些评级是在AMC能够加强其现金状况之前给出的，不再代表该公司偿还债务的能力。尽管如此，低评级使大多数投资工具都不考虑债券，因此利率保持在较低水平。此外，AMC在过去两个季度的收益报告中表现好于预期，这一事实表明华尔街似乎仍然低估了复苏的步伐。因此，机会诞生了。</blockquote> Investor Takeaway<blockquote>投资者要点</blockquote> By no means is this article an endorsement of AMC’s stock. I rather agree with the general consensus here on Seeking Alpha that this is a company to stay away from. What I do want the reader to take away from this, however, is that I believe AMC’s cash position, although weak, is suitable to cover its debt obligations and that its high-yield bonds are now rather attractive because of this. While the security largely came at the price of heavy dilution, this isn’t really a concern as this investment thesis isn’t really concerned about the share price of AMC.<blockquote>这篇文章绝不是对AMC股票的认可。我相当同意Seeking Alpha的普遍共识，即这是一家值得远离的公司。然而，我确实希望读者从中得到的是，我相信AMC的现金状况虽然疲弱，但适合偿还其债务，因此其高收益债券现在相当有吸引力。虽然这种证券很大程度上是以严重稀释为代价的，但这并不是一个真正的问题，因为这篇投资论文并不真正关心AMC的股价。</blockquote> The first lien notes offer the safest investment option and, CUSIP:00165CAR5 in particular, should be a part of any play on AMC’s debt. CUSIP:00165CAN4 is likely the safest though, as it comes due a year before the majority of AMC’s existing debt, further lowering any bankruptcy concerns. I also rather like the CUSIP:00165CAP9 bond as a way to increase returns rather substantially through a bit more risk. While I still believe that the risk of defaulting is relatively low, compared to what it was, it still does exist and the moderate protection is nice to have. I feel that the risk to return ratio here, on second lien versus first lien, is worth it. What I don’t feel is worth it, is the CUSIP:00165AAH1 bond. With a low coupon rate, and a yield to maturity only slightly above that of the more secure second lien note, it offers a fair amount more risk with a negligibly improved payoff. It doesn’t hold the same advantage as the other bonds, as it wasn’t issued in the dire circumstances that AMC was facing in 2020.<blockquote>第一留置权票据提供了最安全的投资选择，尤其是CUSIP：00165CAR5，应该成为AMC债务的任何投资的一部分。CUSIP：00165CAN4可能是最安全的，因为它比AMC现有债务的大部分提前一年到期，进一步降低了破产担忧。我也很喜欢CUSIP：00165CAP9债券，认为这是一种通过承担更多风险来大幅增加回报的方式。虽然我仍然认为违约的风险相对较低，但与过去相比，它仍然存在，适度的保护是件好事。我觉得这里的风险回报比，第二留置权和第一留置权，是值得的。我觉得不值得的是CUSIP：00165AAH1债券。由于票面利率较低，到期收益率仅略高于更安全的第二留置权票据，它提供了相当大的风险，但回报却微乎其微。它不具备与其他债券相同的优势，因为它不是在AMC 2020年面临的严峻环境下发行的。</blockquote> Since I began writing this article in mid-October, the yield of these bonds has already dropped by a notable margin. CUSIP:00165CAP9 (second lien note) for example, which currently has a YTM of 11.294%, had a YTM of 12.451% at the time. Now, CUSIP:00165AAH1 (unsecured) had a 12.811% YTM and CUSIP:00165CAR5 (first lien) had a YTM of 6.57%, which means that their returns have actually improved since then. Regardless, it seems that the bond market, in general, is starting to price in AMC’s recovery and investors may not have this opportunity for too much longer. The days of a 133.36% YTM from AMC’s unsecured debt are long gone, but the current returns aren't too bad.<blockquote>自从我10月中旬开始写这篇文章以来，这些债券的收益率已经大幅下降。例如，CUSIP：00165CAP9（第二留置权票据）目前的YTM为11.294%，当时的YTM为12.451%。现在，CUSIP：00165AAH1（无担保）的YTM为12.811%，CUSIP：00165CAR5（第一留置权）的YTM为6.57%，这意味着从那时起他们的回报实际上有所改善。无论如何，总体而言，债券市场似乎开始消化AMC的复苏，投资者可能不会再有太长时间的机会。AMC无担保债务到期收益率为133.36%的日子早已一去不复返了，但目前的回报还不算太差。</blockquote>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Why I'm Buying AMC's Debt<blockquote>我为什么要购买AMC的债务</blockquote></title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 12.5px; color: #7E829C; margin: 0;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWhy I'm Buying AMC's Debt<blockquote>我为什么要购买AMC的债务</blockquote>\n</h2>\n<h4 class=\"meta\">\n\nSeeking Alpha2021-12-01 21:55\n\n</h4>\n</header>\n<article>\nSummary<blockquote>总结</blockquote> <ul> <li>AMC has recently been able to capitalize heavily on its ‘meme stock’ status and shored up its cash position rather substantially.</li> <li>AMC has been recovering well in the past few months and is set to return to profitability next quarter.</li> <li>While there is still a ways to go before it is in a healthy cash position, AMC is in a suitable position to justify investing in its bonds.</li> <li>AMC was in dire need of capital in the early stages of the pandemic, so it sold bonds with high yields and coupon rates in order to attract creditors.</li> <li>Now that the company has been able to reduce its risk of defaulting, investors can take advantage of these high-yield, underpriced loans with a bit more confidence.</li> </ul> <img src=\"https://static.tigerbbs.com/36eaf0afdfff7e41320877f345125b8c\" tg-width=\"1536\" tg-height=\"1034\" width=\"100%\" height=\"auto\">Mario Tama/Getty Images News<blockquote><ul><li>AMC最近能够大量利用其“模因股票”地位，并大幅支撑其现金头寸。</li><li>AMC在过去几个月中恢复良好，预计下个季度将恢复盈利。</li><li>尽管距离拥有健康的现金状况还有很长的路要走，但AMC处于合适的位置来证明投资其债券的合理性。</li><li>AMC在疫情初期急需资金，因此出售高收益率和票面利率的债券，以吸引债权人。</li><li>既然该公司已经能够降低违约风险，投资者就可以更有信心地利用这些高收益、低价贷款。</li></ul>马里奥·塔玛/盖蒂图片社新闻</blockquote> Earlier this year, as I’m sure most readers are aware, AMC Entertainment(NYSE:AMC)got caught up in the ‘Wall Street Bets’ mania that took the retail investor crowd by storm. Reaching a peak of $72.62 back in June, AMC is now a ways off of its height but is still trading at a fairly elevated level of $33.94 (at the time of article submission). This isn’t an article meant to analyze if this new price is the new norm, I don’t really think that there’s a case to be made that it is. Instead, I’ll be looking at some of AMC’s available bonds, in increasing order of security, and why I believe they’re some of the most attractive securities on the market right now, especially for income investors.<blockquote>今年早些时候，我相信大多数读者都知道，AMC院线（纽约证券交易所股票代码：AMC）陷入了席卷散户投资者的“华尔街押注”热潮。AMC在6月份达到了72.62美元的峰值，现在距离顶峰还有很长的路要走，但仍处于33.94美元的相当高的水平（在提交文章时）。这不是一篇旨在分析这个新价格是否是新规范的文章，我真的不认为有理由证明它是。相反，我将按照安全性递增的顺序研究AMC的一些可用债券，以及为什么我认为它们是目前市场上最具吸引力的证券，尤其是对于收益投资者来说。</blockquote> Likelihood of Payout<blockquote>支付的可能性</blockquote> Before I look at the bonds themselves, understanding the security, or potential lack thereof, that they offer is important. Having&nbsp;lost $4.6 billion&nbsp;last year, and $149 million before the COVID era, it may seem ludicrous to even consider the fact that AMC is a good bet for creditors. However, the company took full advantage of its “meme stock” status and has raised significant funds off the back of its incredibly inflated valuation.<blockquote>在我研究债券本身之前，了解它们提供的安全性或潜在的安全性是很重要的。去年损失了46亿美元，而在新冠疫情爆发之前损失了1.49亿美元，甚至考虑到AMC对债权人来说是一个不错的选择这一事实似乎也很可笑。然而，该公司充分利用了其“模因股票”的地位，并在其令人难以置信的高估值的支持下筹集了大量资金。</blockquote> Even before the company earned its meme status, AMC had raised&nbsp;$917 million&nbsp;from mid-December to late January. $506 million of this came from the sale of new equity and the company was able to convert $100 million in second-lien debt into equity as well. AMC was alsoable to convert $600 million&nbsp;in senior notes held by Silver Lake into equity. The company has also raisedmore than $1 billion&nbsp;from April and November of the previous year through equity and debt raises, as well as “a modest amount of asset sales.” These early capital raises enabled AMC to become a bit better-equipped to handle its existing debt load in light of the previous year’s poor performance. However, all of this together still wasn’t really enough.<blockquote>甚至在该公司获得模因地位之前，AMC就已经从12月中旬到1月底筹集了9.17亿美元。其中5.06亿美元来自出售新股权，该公司还能够将1亿美元的第二留置权债务转换为股权。AMC还能够将Silver Lake持有的6亿美元优先票据转换为股权。从去年4月到11月，该公司还通过股权和债务融资以及“少量资产出售”筹集了超过10亿美元。鉴于上一年的糟糕表现，这些早期融资使AMC能够更好地处理其现有的债务负担。然而，所有这些加在一起仍然不够。</blockquote> Then, late in January, things changed rapidly for the struggling movie giant. Trading at around $5 on January 26, shares would rise to about $20 the following day. While they would soon retreat from such highs, shares sustained an elevated level of trading until late May came around and shares broke the $60 barrier in a matter of days. This new price presented AMC with a golden opportunity.<blockquote>然后，在一月底，这家苦苦挣扎的电影巨头的情况迅速发生了变化。1月26日股价约为5美元，第二天股价将上涨至20美元左右。虽然股价很快就会从这样的高点回落，但股价一直保持较高的交易水平，直到5月底，股价在几天内就突破了60美元大关。这个新价格为AMC提供了一个千载难逢的机会。</blockquote> While the company waited a little to fully seize the opportunity,AMC raised&nbsp;a total of $1.246 billion in the second quarter. All in equity. With such an elevated stock price, AMC was able to raise far more money than they would’ve been able to previously and at a far lower level of dilution. After this more aggressive round of funding, AMC’s CEO, Adam Aron, said of the raise “[it has] substantially strengthen[ed] and improv[ed] AMC’s balance sheet, providing valuable flexibility to respond to potential challenges and capitalize on attractive opportunities in the future.” The last part of this I find particularly interesting, as it implies that AMC may even have some excess capital to invest if a particularly attractive opportunity presents itself. While I’m not sure if AMC is quite in the position to begin spending money on new opportunities again, it does speak towards the confidence in the company’s current capital structure.<blockquote>就在该公司等待了一段时间才完全抓住机会的同时，AMC在第二季度共筹集了12.46亿美元。都是公平的。在股价如此高的情况下，AMC能够以低得多的稀释水平筹集到比以前更多的资金。在这一轮更激进的融资之后，AMC首席执行官亚当·阿伦(Adam Aron)在谈到此次融资时表示，“它大大加强了AMC的资产负债表，为应对潜在挑战和利用有吸引力的机会提供了宝贵的灵活性在未来。”我觉得最后一部分特别有趣，因为它意味着如果出现特别有吸引力的机会，AMC甚至可能有一些多余的资本可供投资。虽然我不确定AMC是否有能力再次开始在新机会上花钱，但这确实表明了人们对公司当前资本结构的信心。</blockquote> Even before this incredible capital raise, Mr. Aron was rather pleased with the company’s standing,saying: “I am optimistic and confident about AMC’s ability to weather this COVID-19 storm. Our focus is no longer on survival.” The executive’s remarks, made in March, even came before AMC’s strongest rally in the stock market. This level of confidence, coming before the company’s largest capital raise, provides even further reassurance. But enough of this discussion of sentiment. With all of this recent movement, what exactly is AMC’s cash position?<blockquote>甚至在这次令人难以置信的融资之前，Aron先生就对公司的地位相当满意，他说：“我对AMC度过这场COVID-19风暴的能力感到乐观和信心。我们的重点不再是生存。”这位高管在3月份发表的言论甚至是在AMC股市最强劲反弹之前发表的。在该公司最大规模的融资之前，这种程度的信心提供了进一步的保证。但是关于情绪的讨论已经够多了。鉴于最近的所有这些变动，AMC的现金状况到底是多少？</blockquote> <img src=\"https://static.tigerbbs.com/f42c5be344a583c11229ebdc7cda4973\" tg-width=\"814\" tg-height=\"491\" width=\"100%\" height=\"auto\"><blockquote></blockquote> <img src=\"https://static.tigerbbs.com/fae8632ca98e5f7c7bcae4dab18268aa\" tg-width=\"831\" tg-height=\"491\" width=\"100%\" height=\"auto\">Source: Author’s Calculations via Bloomberg Terminal<blockquote>资料来源：作者通过彭博终端的计算</blockquote> Examining the company’s liquidity ratios, AMC unsurprisingly isn’t terribly well-positioned. The company’s current ratio, which measures current assets versus current liabilities, has trended below one since data is available. The quick ratio, which excludes inventory from the measure, has never reached 1 for as far back as public data goes. While inventory is typically considered rather liquid, it can require significant time to convert into cash, hence the ‘quick’ liquidity ratio. A ratio of 1 or above signifies that a company’s easily liquidable assets are able to cover all of its short-term debt obligations. As AMC does not have a current ratio, or quick ratio for that matter, above this mark, it cannot simply rely on easy liquidation and current cash to cover its short-term liabilities.<blockquote>检查该公司的流动性比率，毫不奇怪，AMC的地位并不是很好。自有数据以来，该公司的流动比率（衡量流动资产与流动负债的比率）一直低于1。自公开数据以来，将库存排除在衡量标准之外的速动比率从未达到1。虽然库存通常被认为具有相当大的流动性，但它可能需要很长时间才能转化为现金，因此具有“快速”流动性比率。比率为1或以上表明公司的易变现资产能够偿还其所有短期债务。由于AMC的流动比率或速动比率不高于这一水平，因此它不能简单地依靠轻松清算和流动现金来偿还短期负债。</blockquote> Similarly, looking at the company’s debt to asset ratio, we can see that debt dramatically outweighs the company’s assets. Looking at the historical ratios for AMC, we can see that this isn’t anything that new either. While this, unsurprisingly, increased a lot over 2020, the company has a historically high debt to equity ratio. This signals that AMC has largely relied on debt throughout its lifetime to grow its assets. This heavy use of debt is the main culprit behind AMC’s current weak capital position and&nbsp;concerns of bankruptcy&nbsp;last year. Though, the fact that this is nothing new should tell investors that a high debt to asset ratio isn’t inherently a bad thing. The theatre business is a very capital-intensive business and not utilizing debt in this manner would make expansion incredibly difficult.<blockquote>同样，看看公司的资产负债率，我们可以看到债务大大超过了公司的资产。看看AMC的历史比率，我们可以看到这也不是什么新鲜事。虽然不出所料，这一数字在2020年大幅增加，但该公司的债务股本比率处于历史高位。这表明AMC在其一生中很大程度上依赖债务来增加资产。这种债务的大量使用是AMC目前资本状况薄弱和去年破产担忧的罪魁祸首。不过，这并不是什么新鲜事，这一事实应该告诉投资者，高资产负债率本质上并不是一件坏事。剧院业务是一项资本密集型业务，不以这种方式利用债务将使扩张变得极其困难。</blockquote> What is noteworthy, however, is exactly how inflated this ratio has become. In 2020, AMC’s debt to equity ratio turned negative for the first time, signaling that the company’s liabilities surpassed its assets. Often, companies in such a predicament face insolvency as they’re faced with an inability to make good on debt obligations. However, this was at the end of 2020. We’ll have to wait for AMC’s full-year report to see how this has changed, though the company’s lowering of debt and dramatic increase in capital through the sale of stock indicates that this should return to a positive for 2021.<blockquote>然而，值得注意的是，这一比率到底变得有多高。2020年，AMC的负债权益比首次转为负值，表明该公司的负债超过了资产。通常，处于这种困境的公司会面临破产，因为它们无法偿还债务。然而，这是在2020年底。我们必须等待AMC的全年报告才能看到这种情况发生了怎样的变化，尽管该公司通过出售股票降低了债务并大幅增加了资本，这表明2021年应该会恢复正值。</blockquote> If we look at the company’s market value to debt ratio, we can see that AMC’s equity position at the moment is incredibly strong as it transitions away from merely struggling to stay afloat. At .63, AMC is actually in a position to be able to fund its debt obligations through equity. That’s down dramatically from the 23.87 from the end of 2020, though still quite a bit above&nbsp;the .1 average&nbsp;for other U.S. firms. The importance here is more in the tremendous decrease over the last eleven months though. We know that AMC isn’t a pinnacle of financial excellence at the moment, that’s the entire reason this article even exists. What is important to note, is that the company’s financial health is rapidly improving.<blockquote>如果我们看看该公司的市值与债务比率，我们可以看到AMC目前的股权状况非常强劲，因为它已经摆脱了仅仅挣扎着维持生存的状态。AMC的利率为0.63，实际上能够通过股权为其债务提供资金。这比2020年底的23.87大幅下降，但仍远高于其他美国公司0.1的平均水平。不过，这里的重要性更在于过去11个月的大幅下降。我们知道AMC目前并不是财务卓越的顶峰，这就是本文存在的全部原因。值得注意的是，公司的财务状况正在迅速改善。</blockquote> I don’t think that there’s much question that AMC will sell more equity before defaulting, as dilution is far less damaging than defaulting on debt would be. AMC&nbsp;has been prioritizing&nbsp;its debt payments throughout its recovery and there’s no reason that it would stop now that it has even greater means to do so. While the majority of these figures don’t necessarily indicate the most financially healthy company, it does demonstrate a company on the mend which I believe has eliminated concerns of insolvency.<blockquote>我认为AMC在违约前出售更多股权没有太大问题，因为稀释的破坏性远小于债务违约。AMC在整个复苏过程中一直优先考虑债务支付，现在它有更好的手段这样做，没有理由停止。虽然这些数字中的大部分并不一定表明财务状况最健康的公司，但它确实表明了一家正在好转的公司，我相信这已经消除了对破产的担忧。</blockquote> One of the main takeaways here is that a high debt load isn’t really anything new for AMC. Yes, right now it’s higher than usual. This was especially true for the end of 2020. Though, with the capital raised from selling more equity, AMC is in a far better place than it previously was. More importantly, AMC was missing the income it usually has to supplement its high level of debt. As consumers return to theatres, this income will begin to return.<blockquote>这里的主要要点之一是，高债务负担对AMC来说并不是什么新鲜事。是的，现在比平时高。2020年底尤其如此。不过，凭借出售更多股权筹集的资金，AMC的处境比以前好得多。更重要的是，AMC失去了通常用来补充高额债务的收入。随着消费者重返影院，这笔收入将开始回归。</blockquote> Return to Normalcy<blockquote>恢复正常</blockquote> Looking at the numbers doesn’t really paint a great picture for AMC. However, the numbers don’t really tell the full story. Operational success is how companies tend to handle these matters and AMC is just starting to exit the most challenging operational environment of its life. As the world gradually begins a return to normalcy, its cash position will improve dramatically.<blockquote>看看这些数字并不能真正为AMC描绘出一幅美好的画面。然而，这些数字并不能真正说明全部情况。运营成功是公司处理这些问题的方式，而AMC刚刚开始退出其一生中最具挑战性的运营环境。随着世界逐渐开始恢复正常，其现金状况将大幅改善。</blockquote> To start this off, let’s take a look at some Seeking Alpha&nbsp;analysis on AMC. In this article, the author focused on how moviegoing is poised for a comeback on the back of multiple highly-successful film debuts. This is bolstered by the fact that companies seem set to return to the norm of exclusive theatrical releases for new movies, as Disney(NYSE:DIS)&nbsp;recently announced&nbsp;it would. Two other articles,on Cineplex&nbsp;and&nbsp;Cinemark, offer similar conclusions.<blockquote>首先，让我们来看看一些Seeking Alpha对AMC的分析。在这篇文章中，作者重点关注了在多部非常成功的电影处女作之后，观影是如何准备卷土重来的。正如迪士尼（纽约证券交易所股票代码：DIS）最近宣布的那样，公司似乎将回归新电影独家影院上映的规范，这一事实支撑了这一点。另外两篇关于Cineplex和Cinemark的文章也给出了类似的结论。</blockquote> In the above articles, authors examine the future of the theatre business and discuss how the companies are on the path to return to profitability. As I agree with the general theses there, being that theatre operators are on their way back to their old form, I believe it’s safe to say that AMC is officially on the road to recovery. Now, I accept that AMC still has some way to go before becoming profitable again, however it is definitely on the mend. Additionally, the pandemic gave AMC the opportunity to make harsh cuts to its business that will ultimately benefit the company’s operational efficiency moving forward.<blockquote>在上述文章中，作者审视了剧院业务的未来，并讨论了这些公司如何走上恢复盈利的道路。由于我同意那里的总体论点，即剧院运营商正在恢复他们的旧形式，我相信可以肯定地说，AMC正式走上了复苏之路。现在，我承认AMC距离再次盈利还有一段路要走，但它肯定正在好转。此外，疫情让AMC有机会大幅削减其业务，这最终将有利于公司未来的运营效率。</blockquote> More recently, AMC released&nbsp;its third quarter earnings. The company lost $244 million off of $763.2 million in revenue. The positive here is that the company’s revenue climbed 71.5% over the previous quarter. Keep in mind that this doesn’t account for high-profile releases in October such as&nbsp;No Time to Dieor the second&nbsp;Venom&nbsp;title. The upcoming&nbsp;Spiderman&nbsp;and&nbsp;Matrix&nbsp;releases should only expedite the company’s recovery in the final quarter of the year. Corporate leadership&nbsp;is currently guiding&nbsp;towards a positive EBITDA for Q4.<blockquote>最近，AMC发布了第三季度财报。该公司营收为7.632亿美元，亏损2.44亿美元。积极的一面是，该公司的收入比上一季度增长了71.5%。请记住，这并不包括10月份高调发布的内容，例如007：无暇赴死或者第二个毒液标题。即将到来的蜘蛛侠和矩阵发布只会加速公司在今年最后一个季度的复苏。公司领导层目前正在引导第四季度实现正的EBITDA。</blockquote> Moving on, let’s take a look at AMC’s net margin through the years. As the figure above demonstrates, AMC’s been churning out an abysmally low net margin pretty consistently for a decade. This is the normal that AMC is working so hard to return to?! After AMC added a tremendous level of expensive debt during the lows of the pandemic, it now needs to do more than just return to normal in order to successfully pay it off.<blockquote>接下来，我们来看看AMC这些年的净利润率。如上图所示，十年来，AMC的净利润率一直很低。这就是AMC努力回归的常态？！AMC在疫情低谷期间增加了巨额昂贵的债务，现在需要做的不仅仅是恢复正常才能成功偿还债务。</blockquote> AMC’s corporate borrowings have risen from $4.753 billion&nbsp;in 2019, to $5.453 billion&nbsp;as of September 30th. The good news, if there is any, is that AMC’s $5.453 billion in corporate borrowings marks a ~$250 million decrease from the $5.716 billion that the company had at the end of 2020. What really caught me by surprise, however, is that&nbsp;the company’s 2020 interest expense on corporate borrowings&nbsp;was only up ~6.22% from 2019. So, although expensive, the ~20.26% jump in total corporate borrowings in the same period indicates that this debt is actually less expensive than the company’s existing debt was.<blockquote>截至9月30日，AMC的企业借款已从2019年的47.53亿美元增至54.53亿美元。好消息（如果有的话）是，AMC的企业借款为54.53亿美元，比2020年底的57.16亿美元减少了约2.5亿美元。然而，真正让我惊讶的是，该公司2020年的企业借款利息支出仅比2019年增长了约6.22%。因此，尽管成本高昂，但同期企业借款总额增长了约20.26%，表明这笔债务实际上比公司现有债务便宜。</blockquote> As AMC begins a return to normalcy, I would expect to see it recover to a healthy interest coverage ratio. Before the pandemic, AMC’s interest coverage ratio was consistently above 5, meaning that its EBITDA could be used to pay off its interest five times over. A mere 6.22% increase in interest expenses means that AMC should be able to recover this important metric with general ease. Essentially, what this demonstrates is that AMC should be able to fully cover its interest expenses with operating revenues as soon as next year.<blockquote>随着AMC开始恢复正常，我预计它将恢复到健康的利息覆盖率。在疫情爆发之前，AMC的利息覆盖率一直高于5，这意味着其EBITDA可以用来偿还五倍的利息。利息支出仅增长6.22%就意味着AMC应该能够轻松恢复这一重要指标。从本质上讲，这表明AMC最快明年就应该能够用营业收入全额支付利息支出。</blockquote> So, with the risk of defaulting on future interest payments looking pretty low, the only major risk remaining is the company’s questionable ability to pay off its debt upon maturity. I don’t mean to downplay the importance of this risk, as it carries the most potential for defaulting, so let’s take a look at how AMC’s return to normalcy will affect its ability to pay off its debt.<blockquote>因此，由于未来利息支付违约的风险看起来相当低，剩下的唯一主要风险是该公司到期后偿还债务的能力值得怀疑。我无意淡化这种风险的重要性，因为它最有可能违约，所以让我们看看AMC恢复正常将如何影响其偿还债务的能力。</blockquote> Mr. Aron discussed in&nbsp;the company’s most recent earnings call&nbsp;that debt, out of all of the issues surrounding AMC for the past two years, was never something that was seriously concerning to him. The company took on a lot of debt during the pandemic though, according to Mr. Aron, it was done “in a smart way.” He explained that there are no maturity dates before 2023, which will only be “a few $100 million worth”, and that the majority of the company’s debt will come due in 2026.<blockquote>阿伦先生在公司最近的收益看涨期权上讨论说，在过去两年围绕AMC的所有问题中，债务从来都不是他严重担心的事情。不过，阿伦先生表示，该公司在大流行期间承担了大量债务，但这是“以明智的方式”完成的。他解释说，2023年之前没有到期日，这将只是“价值几亿美元”，公司的大部分债务将于2026年到期。</blockquote> The major component that Mr. Aron highlighted, however, is that the presence of debt isn’t inherently a bad thing. Of course, high debt loads such as AMC’s aren’t exactly the most healthy in the world, but almost every large corporation in the country carries debt to maximize shareholder returns. With a return to profitability as soon as next quarter, AMC’s operational health is rapidly improving and it can update its debt position to reflect that. The company expects to refinance its debt starting in 2023, lowering its interest payments and pushing back maturity dates. The goal isn’t to completely eliminate debt, rather it is to make debt a more manageable amount. The way the company is currently trending, this seems more than doable.<blockquote>然而，阿伦先生强调的主要因素是，债务的存在本质上并不是一件坏事。当然，像AMC这样的高债务负担并不是世界上最健康的，但该国几乎每家大公司都背负债务以实现股东回报最大化。随着最快下季度恢复盈利，AMC的运营健康状况正在迅速改善，它可以更新其债务状况以反映这一点。该公司预计从2023年开始为其债务进行再融资，降低利息支付并推迟到期日。目标不是完全消除债务，而是让债务变得更容易管理。按照该公司目前的趋势，这似乎是完全可行的。</blockquote> Attractive Bond Offerings<blockquote>有吸引力的债券发行</blockquote> So now that we’ve determined that AMC looks to be fairly reliable in its ability to pay off its debt, it’s time to find the bonds that look the most attractive. I’ve found four high-yield bonds that I believe offer the best investment opportunities,courtesy of Finra. Typically, high-yield bonds are rather risky investments as, in order to convince creditors to lend money, firms must offer a substantial reward. However, I argue that, due to AMC’s dramatically improved cash position, its bonds are unjustly discounted and offer a strong investment opportunity.<blockquote>因此，既然我们已经确定AMC偿还债务的能力看起来相当可靠，那么是时候寻找看起来最有吸引力的债券了。在Finra的帮助下，我发现了四种我认为提供最佳投资机会的高收益债券。通常，高收益债券是风险相当大的投资，因为为了说服债权人放贷，公司必须提供可观的回报。然而，我认为，由于AMC的现金状况显着改善，其债券存在不公平的折扣，并提供了一个强大的投资机会。</blockquote> Beginning with the highest-yielding bond,CUSIP:00165AAH1, the security currently has a yield to maturity of 13.608%. With a coupon rate of 5.75%, paid semi-annually, the appeal here isn’t so much the passive income opportunity, but the overall yield rate. Now, a 5.75% annual coupon rate isn’t too shabby, but the 12.881% yield to maturity is what grabs my attention. Assuming that my above analysis holds true, and AMC is able to pay off its current debt loads, the yield here is pretty strong. However, this bond does carry the highest level of risk with it as an unsecured note.<blockquote>从收益率最高的债券CUSIP：00165AAH1开始，该证券目前的到期收益率为13.608%。票面利率为5.75%，每半年支付一次，这里的吸引力与其说是被动收入机会，不如说是整体收益率。现在，5.75%的年票面利率还不算太差，但12.881%的到期收益率引起了我的注意。假设我的上述分析成立，并且AMC能够偿还当前的债务负担，那么这里的收益率相当强劲。然而，这种债券作为无担保票据确实具有最高水平的风险。</blockquote> The second highest-yielding bond,CUSIP:00165CAP9, does hold a noteworthy advantage over the previously discussed CUSIP:00165AAH1 bond. While its yield to maturity is slightly lower, at 11.294%, it is a second lien note. This is the second-highest bond priority ranking and, even more importantly, is ensured. If AMC were to default on its payments, the value of the loan has been secured by collateral. This would force the sale of assets in order to ensure that loan-holders receive their payments. Now, as a second lien note holder, owners aren’t guaranteed to receive the entire value of their loan in the case of the company defaulting, but they will at least receive a fraction. You will be paying for this heightened security a bit via the slightly lower yield rate, especially as its maturity date is a full year later, on June 6th, 2026. However, with a coupon rate of 12%, paid semi-annually, the moderately guaranteed income that the bond can provide is incredibly attractive. The bond is currently trading just below its price at maturity of $1,000, at $983.90.<blockquote>第二高收益债券CUSIP：00165CAP9确实比之前讨论的CUSIP：00165AAH1债券具有显着的优势。虽然其到期收益率略低，为11.294%，但它是第二留置权票据。这是第二高的债券优先级，更重要的是，这是有保证的。如果AMC拖欠还款，贷款的价值将由抵押品担保。这将迫使出售资产，以确保贷款持有人收到付款。现在，作为第二留置权票据持有人，在公司违约的情况下，业主不能保证收到全部贷款价值，但他们至少会收到一小部分。您将通过略低的收益率为这种增强的证券支付一点费用，特别是因为它的到期日是一整年后的2026年6月6日。然而，该债券的票面利率为12%，每半年支付一次，所能提供的适度保证收入极具吸引力。该债券目前的交易价格略低于1,000美元的到期价格，为983.90美元。</blockquote> If you’re after the full security that a first lien note would offer, there are also a couple of good options. However, keep in mind that you will be paying an even greater premium for this security. Both,CUSIP:00165CAN4&nbsp;and&nbsp;CUSIP:00165CAR5, have yield to maturity rates that are in the 6% range. The first of the two, CUSIP:00165CAN4, matures on April 15th, 2025 and has a yield to maturity rate of 7.905%. The second of the two expires the following year on April 24th, with a yield to maturity rate of 7.844%. Both are trading slightly above their price at maturity of $1,000, with CUSIP:00165CAN4 at $1072.50 and CUSIP:00165CAR5 at $1,054.90 and $1,060 respectively. Both bonds also have a coupon rate of 10.5%, paid semi-annually, representing a rather strong source of, consistent, secured income. Assuming the company doesn’t go bankrupt before the maturity dates, which is seeming incredibly unlikely at this point, the return on these bonds is rather attractive.<blockquote>如果你想要第一留置权票据所提供的全部担保，也有几个不错的选择。但是，请记住，您将为这种证券支付更高的溢价。CUSIP：00165 CAN 4和CUSIP：00165CAR5的到期收益率均在6%范围内。两者中的第一个是CUSIP：00165CAN4，于2025年4月15日到期，到期收益率为7.905%。两者中的第二只于次年4月24日到期，到期收益率为7.844%。两者的交易价格均略高于1,000美元的到期价格，CUSIP：00165CAN4分别为1072.50美元，CUSIP：00165CAR5分别为1,054.90美元和1,060美元。这两种债券的票面利率均为10.5%，每半年支付一次，是相当强大的、持续的、有保障的收入来源。假设该公司不会在到期日之前破产（目前这似乎不太可能），这些债券的回报相当有吸引力。</blockquote> So, how did these incredibly attractive offerings even come to exist in the first place? Well, the CUSIP:00165CAP9 bond was issued in late 2020, a time where AMC was struggling tremendously and there weren’t any murmurs of a ‘meme stock’ rally on the horizon. At that point, a 12% coupon rate compounded semi-annually looked about the only way the company could convince creditors to loan money. CUSIP:00165CAN4 and CUSIP:00165CAR5, the two first lien notes, were also issued in mid- to late-2020 and, for the same reasons, were offered at attractive loaning figures to try and make up for the immense risk they carried. CUSIP:00165AAH1 was first offered in 2016, hence its lower coupon rate, but still shares one of the most important figures with the other loans -- a terrible rating. However, these ratings were given before AMC had been able to strengthen its cash position and no longer represent the company’s ability to make good on its debt payments. Even still, the low ratings keep the bonds out of mind for a majority of investing tools and, therefore, keep interest low. Additionally, the fact that AMC has performed&nbsp;better than expected&nbsp;in its past quarterly two earnings reports demonstrates that the Street still seems to be underestimating the pace of recovery. Hence, an opportunity is born.<blockquote>那么，这些极具吸引力的产品最初是如何产生的呢？嗯，CUSIP：00165CAP9债券是在2020年底发行的，当时AMC陷入了巨大的困境，而且没有任何关于“模因股票”即将上涨的传言。当时，每半年复利12%的票面利率似乎是该公司说服债权人贷款的唯一方法。CUSIP：00165CAN4和CUSIP：00165CAR5是前两张留置权票据，也于2020年中后期发行，出于同样的原因，以有吸引力的贷款数字提供，以试图弥补它们所承担的巨大风险。CUSIP：00165AAH1于2016年首次发行，因此其票面利率较低，但仍与其他贷款共享最重要的数字之一——糟糕的评级。然而，这些评级是在AMC能够加强其现金状况之前给出的，不再代表该公司偿还债务的能力。尽管如此，低评级使大多数投资工具都不考虑债券，因此利率保持在较低水平。此外，AMC在过去两个季度的收益报告中表现好于预期，这一事实表明华尔街似乎仍然低估了复苏的步伐。因此，机会诞生了。</blockquote> Investor Takeaway<blockquote>投资者要点</blockquote> By no means is this article an endorsement of AMC’s stock. I rather agree with the general consensus here on Seeking Alpha that this is a company to stay away from. What I do want the reader to take away from this, however, is that I believe AMC’s cash position, although weak, is suitable to cover its debt obligations and that its high-yield bonds are now rather attractive because of this. While the security largely came at the price of heavy dilution, this isn’t really a concern as this investment thesis isn’t really concerned about the share price of AMC.<blockquote>这篇文章绝不是对AMC股票的认可。我相当同意Seeking Alpha的普遍共识，即这是一家值得远离的公司。然而，我确实希望读者从中得到的是，我相信AMC的现金状况虽然疲弱，但适合偿还其债务，因此其高收益债券现在相当有吸引力。虽然这种证券很大程度上是以严重稀释为代价的，但这并不是一个真正的问题，因为这篇投资论文并不真正关心AMC的股价。</blockquote> The first lien notes offer the safest investment option and, CUSIP:00165CAR5 in particular, should be a part of any play on AMC’s debt. CUSIP:00165CAN4 is likely the safest though, as it comes due a year before the majority of AMC’s existing debt, further lowering any bankruptcy concerns. I also rather like the CUSIP:00165CAP9 bond as a way to increase returns rather substantially through a bit more risk. While I still believe that the risk of defaulting is relatively low, compared to what it was, it still does exist and the moderate protection is nice to have. I feel that the risk to return ratio here, on second lien versus first lien, is worth it. What I don’t feel is worth it, is the CUSIP:00165AAH1 bond. With a low coupon rate, and a yield to maturity only slightly above that of the more secure second lien note, it offers a fair amount more risk with a negligibly improved payoff. It doesn’t hold the same advantage as the other bonds, as it wasn’t issued in the dire circumstances that AMC was facing in 2020.<blockquote>第一留置权票据提供了最安全的投资选择，尤其是CUSIP：00165CAR5，应该成为AMC债务的任何投资的一部分。CUSIP：00165CAN4可能是最安全的，因为它比AMC现有债务的大部分提前一年到期，进一步降低了破产担忧。我也很喜欢CUSIP：00165CAP9债券，认为这是一种通过承担更多风险来大幅增加回报的方式。虽然我仍然认为违约的风险相对较低，但与过去相比，它仍然存在，适度的保护是件好事。我觉得这里的风险回报比，第二留置权和第一留置权，是值得的。我觉得不值得的是CUSIP：00165AAH1债券。由于票面利率较低，到期收益率仅略高于更安全的第二留置权票据，它提供了相当大的风险，但回报却微乎其微。它不具备与其他债券相同的优势，因为它不是在AMC 2020年面临的严峻环境下发行的。</blockquote> Since I began writing this article in mid-October, the yield of these bonds has already dropped by a notable margin. CUSIP:00165CAP9 (second lien note) for example, which currently has a YTM of 11.294%, had a YTM of 12.451% at the time. Now, CUSIP:00165AAH1 (unsecured) had a 12.811% YTM and CUSIP:00165CAR5 (first lien) had a YTM of 6.57%, which means that their returns have actually improved since then. Regardless, it seems that the bond market, in general, is starting to price in AMC’s recovery and investors may not have this opportunity for too much longer. The days of a 133.36% YTM from AMC’s unsecured debt are long gone, but the current returns aren't too bad.<blockquote>自从我10月中旬开始写这篇文章以来，这些债券的收益率已经大幅下降。例如，CUSIP：00165CAP9（第二留置权票据）目前的YTM为11.294%，当时的YTM为12.451%。现在，CUSIP：00165AAH1（无担保）的YTM为12.811%，CUSIP：00165CAR5（第一留置权）的YTM为6.57%，这意味着从那时起他们的回报实际上有所改善。无论如何，总体而言，债券市场似乎开始消化AMC的复苏，投资者可能不会再有太长时间的机会。AMC无担保债务到期收益率为133.36%的日子早已一去不复返了，但目前的回报还不算太差。</blockquote>\n<div class=\"bt-text\">\n\n\n 来源：<a href=\"https://seekingalpha.com/article/4472766-amc-bonds-why-i-am-buying\">Seeking Alpha</a>\n为提升您的阅读体验，我们对本页面进行了排版优化\n\n\n</div>\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"AMC":"AMC院线"},"source_url":"https://seekingalpha.com/article/4472766-amc-bonds-why-i-am-buying","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1125581925","content_text":"Summary\n\nAMC has recently been able to capitalize heavily on its ‘meme stock’ status and shored up its cash position rather substantially.\nAMC has been recovering well in the past few months and is set to return to profitability next quarter.\nWhile there is still a ways to go before it is in a healthy cash position, AMC is in a suitable position to justify investing in its bonds.\nAMC was in dire need of capital in the early stages of the pandemic, so it sold bonds with high yields and coupon rates in order to attract creditors.\nNow that the company has been able to reduce its risk of defaulting, investors can take advantage of these high-yield, underpriced loans with a bit more confidence.\n\nMario Tama/Getty Images News\nEarlier this year, as I’m sure most readers are aware, AMC Entertainment(NYSE:AMC)got caught up in the ‘Wall Street Bets’ mania that took the retail investor crowd by storm. Reaching a peak of $72.62 back in June, AMC is now a ways off of its height but is still trading at a fairly elevated level of $33.94 (at the time of article submission). This isn’t an article meant to analyze if this new price is the new norm, I don’t really think that there’s a case to be made that it is. Instead, I’ll be looking at some of AMC’s available bonds, in increasing order of security, and why I believe they’re some of the most attractive securities on the market right now, especially for income investors.\nLikelihood of Payout\nBefore I look at the bonds themselves, understanding the security, or potential lack thereof, that they offer is important. Having lost $4.6 billion last year, and $149 million before the COVID era, it may seem ludicrous to even consider the fact that AMC is a good bet for creditors. However, the company took full advantage of its “meme stock” status and has raised significant funds off the back of its incredibly inflated valuation.\nEven before the company earned its meme status, AMC had raised $917 million from mid-December to late January. $506 million of this came from the sale of new equity and the company was able to convert $100 million in second-lien debt into equity as well. AMC was alsoable to convert $600 million in senior notes held by Silver Lake into equity. The company has also raisedmore than $1 billion from April and November of the previous year through equity and debt raises, as well as “a modest amount of asset sales.” These early capital raises enabled AMC to become a bit better-equipped to handle its existing debt load in light of the previous year’s poor performance. However, all of this together still wasn’t really enough.\nThen, late in January, things changed rapidly for the struggling movie giant. Trading at around $5 on January 26, shares would rise to about $20 the following day. While they would soon retreat from such highs, shares sustained an elevated level of trading until late May came around and shares broke the $60 barrier in a matter of days. This new price presented AMC with a golden opportunity.\nWhile the company waited a little to fully seize the opportunity,AMC raised a total of $1.246 billion in the second quarter. All in equity. With such an elevated stock price, AMC was able to raise far more money than they would’ve been able to previously and at a far lower level of dilution. After this more aggressive round of funding, AMC’s CEO, Adam Aron, said of the raise “[it has] substantially strengthen[ed] and improv[ed] AMC’s balance sheet, providing valuable flexibility to respond to potential challenges and capitalize on attractive opportunities in the future.” The last part of this I find particularly interesting, as it implies that AMC may even have some excess capital to invest if a particularly attractive opportunity presents itself. While I’m not sure if AMC is quite in the position to begin spending money on new opportunities again, it does speak towards the confidence in the company’s current capital structure.\nEven before this incredible capital raise, Mr. Aron was rather pleased with the company’s standing,saying: “I am optimistic and confident about AMC’s ability to weather this COVID-19 storm. Our focus is no longer on survival.” The executive’s remarks, made in March, even came before AMC’s strongest rally in the stock market. This level of confidence, coming before the company’s largest capital raise, provides even further reassurance. But enough of this discussion of sentiment. With all of this recent movement, what exactly is AMC’s cash position?\n\nSource: Author’s Calculations via Bloomberg Terminal\nExamining the company’s liquidity ratios, AMC unsurprisingly isn’t terribly well-positioned. The company’s current ratio, which measures current assets versus current liabilities, has trended below one since data is available. The quick ratio, which excludes inventory from the measure, has never reached 1 for as far back as public data goes. While inventory is typically considered rather liquid, it can require significant time to convert into cash, hence the ‘quick’ liquidity ratio. A ratio of 1 or above signifies that a company’s easily liquidable assets are able to cover all of its short-term debt obligations. As AMC does not have a current ratio, or quick ratio for that matter, above this mark, it cannot simply rely on easy liquidation and current cash to cover its short-term liabilities.\nSimilarly, looking at the company’s debt to asset ratio, we can see that debt dramatically outweighs the company’s assets. Looking at the historical ratios for AMC, we can see that this isn’t anything that new either. While this, unsurprisingly, increased a lot over 2020, the company has a historically high debt to equity ratio. This signals that AMC has largely relied on debt throughout its lifetime to grow its assets. This heavy use of debt is the main culprit behind AMC’s current weak capital position and concerns of bankruptcy last year. Though, the fact that this is nothing new should tell investors that a high debt to asset ratio isn’t inherently a bad thing. The theatre business is a very capital-intensive business and not utilizing debt in this manner would make expansion incredibly difficult.\nWhat is noteworthy, however, is exactly how inflated this ratio has become. In 2020, AMC’s debt to equity ratio turned negative for the first time, signaling that the company’s liabilities surpassed its assets. Often, companies in such a predicament face insolvency as they’re faced with an inability to make good on debt obligations. However, this was at the end of 2020. We’ll have to wait for AMC’s full-year report to see how this has changed, though the company’s lowering of debt and dramatic increase in capital through the sale of stock indicates that this should return to a positive for 2021.\nIf we look at the company’s market value to debt ratio, we can see that AMC’s equity position at the moment is incredibly strong as it transitions away from merely struggling to stay afloat. At .63, AMC is actually in a position to be able to fund its debt obligations through equity. That’s down dramatically from the 23.87 from the end of 2020, though still quite a bit above the .1 average for other U.S. firms. The importance here is more in the tremendous decrease over the last eleven months though. We know that AMC isn’t a pinnacle of financial excellence at the moment, that’s the entire reason this article even exists. What is important to note, is that the company’s financial health is rapidly improving.\nI don’t think that there’s much question that AMC will sell more equity before defaulting, as dilution is far less damaging than defaulting on debt would be. AMC has been prioritizing its debt payments throughout its recovery and there’s no reason that it would stop now that it has even greater means to do so. While the majority of these figures don’t necessarily indicate the most financially healthy company, it does demonstrate a company on the mend which I believe has eliminated concerns of insolvency.\nOne of the main takeaways here is that a high debt load isn’t really anything new for AMC. Yes, right now it’s higher than usual. This was especially true for the end of 2020. Though, with the capital raised from selling more equity, AMC is in a far better place than it previously was. More importantly, AMC was missing the income it usually has to supplement its high level of debt. As consumers return to theatres, this income will begin to return.\nReturn to Normalcy\nLooking at the numbers doesn’t really paint a great picture for AMC. However, the numbers don’t really tell the full story. Operational success is how companies tend to handle these matters and AMC is just starting to exit the most challenging operational environment of its life. As the world gradually begins a return to normalcy, its cash position will improve dramatically.\nTo start this off, let’s take a look at some Seeking Alpha analysis on AMC. In this article, the author focused on how moviegoing is poised for a comeback on the back of multiple highly-successful film debuts. This is bolstered by the fact that companies seem set to return to the norm of exclusive theatrical releases for new movies, as Disney(NYSE:DIS) recently announced it would. Two other articles,on Cineplex and Cinemark, offer similar conclusions.\nIn the above articles, authors examine the future of the theatre business and discuss how the companies are on the path to return to profitability. As I agree with the general theses there, being that theatre operators are on their way back to their old form, I believe it’s safe to say that AMC is officially on the road to recovery. Now, I accept that AMC still has some way to go before becoming profitable again, however it is definitely on the mend. Additionally, the pandemic gave AMC the opportunity to make harsh cuts to its business that will ultimately benefit the company’s operational efficiency moving forward.\nMore recently, AMC released its third quarter earnings. The company lost $244 million off of $763.2 million in revenue. The positive here is that the company’s revenue climbed 71.5% over the previous quarter. Keep in mind that this doesn’t account for high-profile releases in October such as No Time to Dieor the second Venom title. The upcoming Spiderman and Matrix releases should only expedite the company’s recovery in the final quarter of the year. Corporate leadership is currently guiding towards a positive EBITDA for Q4.\nMoving on, let’s take a look at AMC’s net margin through the years. As the figure above demonstrates, AMC’s been churning out an abysmally low net margin pretty consistently for a decade. This is the normal that AMC is working so hard to return to?! After AMC added a tremendous level of expensive debt during the lows of the pandemic, it now needs to do more than just return to normal in order to successfully pay it off.\nAMC’s corporate borrowings have risen from $4.753 billion in 2019, to $5.453 billion as of September 30th. The good news, if there is any, is that AMC’s $5.453 billion in corporate borrowings marks a ~$250 million decrease from the $5.716 billion that the company had at the end of 2020. What really caught me by surprise, however, is that the company’s 2020 interest expense on corporate borrowings was only up ~6.22% from 2019. So, although expensive, the ~20.26% jump in total corporate borrowings in the same period indicates that this debt is actually less expensive than the company’s existing debt was.\nAs AMC begins a return to normalcy, I would expect to see it recover to a healthy interest coverage ratio. Before the pandemic, AMC’s interest coverage ratio was consistently above 5, meaning that its EBITDA could be used to pay off its interest five times over. A mere 6.22% increase in interest expenses means that AMC should be able to recover this important metric with general ease. Essentially, what this demonstrates is that AMC should be able to fully cover its interest expenses with operating revenues as soon as next year.\nSo, with the risk of defaulting on future interest payments looking pretty low, the only major risk remaining is the company’s questionable ability to pay off its debt upon maturity. I don’t mean to downplay the importance of this risk, as it carries the most potential for defaulting, so let’s take a look at how AMC’s return to normalcy will affect its ability to pay off its debt.\nMr. Aron discussed in the company’s most recent earnings call that debt, out of all of the issues surrounding AMC for the past two years, was never something that was seriously concerning to him. The company took on a lot of debt during the pandemic though, according to Mr. Aron, it was done “in a smart way.” He explained that there are no maturity dates before 2023, which will only be “a few $100 million worth”, and that the majority of the company’s debt will come due in 2026.\nThe major component that Mr. Aron highlighted, however, is that the presence of debt isn’t inherently a bad thing. Of course, high debt loads such as AMC’s aren’t exactly the most healthy in the world, but almost every large corporation in the country carries debt to maximize shareholder returns. With a return to profitability as soon as next quarter, AMC’s operational health is rapidly improving and it can update its debt position to reflect that. The company expects to refinance its debt starting in 2023, lowering its interest payments and pushing back maturity dates. The goal isn’t to completely eliminate debt, rather it is to make debt a more manageable amount. The way the company is currently trending, this seems more than doable.\nAttractive Bond Offerings\nSo now that we’ve determined that AMC looks to be fairly reliable in its ability to pay off its debt, it’s time to find the bonds that look the most attractive. I’ve found four high-yield bonds that I believe offer the best investment opportunities,courtesy of Finra. Typically, high-yield bonds are rather risky investments as, in order to convince creditors to lend money, firms must offer a substantial reward. However, I argue that, due to AMC’s dramatically improved cash position, its bonds are unjustly discounted and offer a strong investment opportunity.\nBeginning with the highest-yielding bond,CUSIP:00165AAH1, the security currently has a yield to maturity of 13.608%. With a coupon rate of 5.75%, paid semi-annually, the appeal here isn’t so much the passive income opportunity, but the overall yield rate. Now, a 5.75% annual coupon rate isn’t too shabby, but the 12.881% yield to maturity is what grabs my attention. Assuming that my above analysis holds true, and AMC is able to pay off its current debt loads, the yield here is pretty strong. However, this bond does carry the highest level of risk with it as an unsecured note.\nThe second highest-yielding bond,CUSIP:00165CAP9, does hold a noteworthy advantage over the previously discussed CUSIP:00165AAH1 bond. While its yield to maturity is slightly lower, at 11.294%, it is a second lien note. This is the second-highest bond priority ranking and, even more importantly, is ensured. If AMC were to default on its payments, the value of the loan has been secured by collateral. This would force the sale of assets in order to ensure that loan-holders receive their payments. Now, as a second lien note holder, owners aren’t guaranteed to receive the entire value of their loan in the case of the company defaulting, but they will at least receive a fraction. You will be paying for this heightened security a bit via the slightly lower yield rate, especially as its maturity date is a full year later, on June 6th, 2026. However, with a coupon rate of 12%, paid semi-annually, the moderately guaranteed income that the bond can provide is incredibly attractive. The bond is currently trading just below its price at maturity of $1,000, at $983.90.\nIf you’re after the full security that a first lien note would offer, there are also a couple of good options. However, keep in mind that you will be paying an even greater premium for this security. Both,CUSIP:00165CAN4 and CUSIP:00165CAR5, have yield to maturity rates that are in the 6% range. The first of the two, CUSIP:00165CAN4, matures on April 15th, 2025 and has a yield to maturity rate of 7.905%. The second of the two expires the following year on April 24th, with a yield to maturity rate of 7.844%. Both are trading slightly above their price at maturity of $1,000, with CUSIP:00165CAN4 at $1072.50 and CUSIP:00165CAR5 at $1,054.90 and $1,060 respectively. Both bonds also have a coupon rate of 10.5%, paid semi-annually, representing a rather strong source of, consistent, secured income. Assuming the company doesn’t go bankrupt before the maturity dates, which is seeming incredibly unlikely at this point, the return on these bonds is rather attractive.\nSo, how did these incredibly attractive offerings even come to exist in the first place? Well, the CUSIP:00165CAP9 bond was issued in late 2020, a time where AMC was struggling tremendously and there weren’t any murmurs of a ‘meme stock’ rally on the horizon. At that point, a 12% coupon rate compounded semi-annually looked about the only way the company could convince creditors to loan money. CUSIP:00165CAN4 and CUSIP:00165CAR5, the two first lien notes, were also issued in mid- to late-2020 and, for the same reasons, were offered at attractive loaning figures to try and make up for the immense risk they carried. CUSIP:00165AAH1 was first offered in 2016, hence its lower coupon rate, but still shares one of the most important figures with the other loans -- a terrible rating. However, these ratings were given before AMC had been able to strengthen its cash position and no longer represent the company’s ability to make good on its debt payments. Even still, the low ratings keep the bonds out of mind for a majority of investing tools and, therefore, keep interest low. Additionally, the fact that AMC has performed better than expected in its past quarterly two earnings reports demonstrates that the Street still seems to be underestimating the pace of recovery. Hence, an opportunity is born.\nInvestor Takeaway\nBy no means is this article an endorsement of AMC’s stock. I rather agree with the general consensus here on Seeking Alpha that this is a company to stay away from. What I do want the reader to take away from this, however, is that I believe AMC’s cash position, although weak, is suitable to cover its debt obligations and that its high-yield bonds are now rather attractive because of this. While the security largely came at the price of heavy dilution, this isn’t really a concern as this investment thesis isn’t really concerned about the share price of AMC.\nThe first lien notes offer the safest investment option and, CUSIP:00165CAR5 in particular, should be a part of any play on AMC’s debt. CUSIP:00165CAN4 is likely the safest though, as it comes due a year before the majority of AMC’s existing debt, further lowering any bankruptcy concerns. I also rather like the CUSIP:00165CAP9 bond as a way to increase returns rather substantially through a bit more risk. While I still believe that the risk of defaulting is relatively low, compared to what it was, it still does exist and the moderate protection is nice to have. I feel that the risk to return ratio here, on second lien versus first lien, is worth it. What I don’t feel is worth it, is the CUSIP:00165AAH1 bond. With a low coupon rate, and a yield to maturity only slightly above that of the more secure second lien note, it offers a fair amount more risk with a negligibly improved payoff. It doesn’t hold the same advantage as the other bonds, as it wasn’t issued in the dire circumstances that AMC was facing in 2020.\nSince I began writing this article in mid-October, the yield of these bonds has already dropped by a notable margin. CUSIP:00165CAP9 (second lien note) for example, which currently has a YTM of 11.294%, had a YTM of 12.451% at the time. Now, CUSIP:00165AAH1 (unsecured) had a 12.811% YTM and CUSIP:00165CAR5 (first lien) had a YTM of 6.57%, which means that their returns have actually improved since then. Regardless, it seems that the bond market, in general, is starting to price in AMC’s recovery and investors may not have this opportunity for too much longer. The days of a 133.36% YTM from AMC’s unsecured debt are long gone, but the current returns aren't too bad.","news_type":1,"symbols_score_info":{"AMC":0.9}},"isVote":1,"tweetType":1,"viewCount":2775,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"CN","currentLanguage":"CN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":36,"xxTargetLangEnum":"ZH_CN"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/603365171"}