This Is How Much AMC's "War Chest" Is Costing You
There's no denying AMC Entertainment Holdings' (NYSE: AMC) fiscal fourth quarter was a success. Not only did revenue grow dramatically on a year-over-year (YOY) basis, but the operating loss was whittled down as well. In fact, the movie theater chain's top line for the three-month stretch ending in December marked the most sales the company's seen in a couple of years.
CEO Adam Aron was also proud to point out during the conference call that AMC is now sitting on a $1.8 billion "war chest" of cash and credit. He's not afraid to dip into it either. For instance, although at a slower pace than in the past, theater renovations continue.
If you think this so-called war chest simply materialized out of thin air, though, think again. Ultimately, shareholders are paying for it in the form of drastic dilution while higher-interest payment costs linked to a bigger debt load chip away at what little EBITDA (earnings before interest, taxes, depreciation, and amortization) remains after AMC Entertainment pays all its other bills.
Source Fool.com
