AMC gets commitment for $850 million credit facility for Loews merger

By Sara Rosenberg

New York, Sept. 13 - AMC Entertainment Inc. anticipates entering into an up to $850 million senior secured credit facility in connection with its proposed merger with Loews Cineplex Entertainment Corp., according to a 10-Q filed with the Securities and Exchange Commission Tuesday.

Citigroup Global Markets Inc., JPMorgan Chase Bank and Credit Suisse First Boston have provided the credit facility commitment.

The company expects the new credit facility to consist of a $650 million term loan with an interest rate of Libor plus 250 bps and a $200 million revolver with an interest rate of Libor plus 175 bps, the filing said.

It is also expected that the new term loan would not contain any financial covenants, but the revolver would be subject to a net senior secured debt to EBITDA ratio of no more than 3.25 times.

Proceeds from the new credit facility will be used to refinance both Loews' and AMC's existing senior secured credit facilities.

AMC would also have a $325 million senior secured bridge loan facility that would be used only if Loews' senior subordinated notes need to be repurchased as part of the merger. The bridge facility would carry an interest rate of the lower of 10% or the yield at the time on AMC's outstanding 8% senior subordinated notes due 2014. However, the interest rate would increase by 75 bps every six months following the draw, up to a cap of 12%, or 12.5% depending on the rating assigned to the combined company's debt.

Under the agreement, Marquee Holdings, AMC's current holding company, which is controlled by affiliates of J.P. Morgan Partners LLC and Apollo Management LP, will continue as the holding company for the merged company. The current stockholders of LCE Holdings Inc., Loew's current holding company, including affiliates of Bain Capital Partners, The Carlyle Group and Spectrum Equity Investors, would hold about 40% of the outstanding capital stock of the continuing holding company.

The transaction is expected to close sometime late in 2005 or early in 2006.

The merged theatrical exhibition company will be called AMC Entertainment and will be based in Kansas City, Mo.

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