AMC Holdings – Dalian Wanda never funded expansion

AMC Holdings has responded to media reports citing a document by Chinese regulators ordering banks to cease lending to Dalian Wanda to fund its foreign acquisitions.

In a statement issued on Tuesday, AMC Holdings said Dalian Wanda has never been a source of its acquisition funding, adding that recent acquisitions were completed and fully funded by AMC through its own resources in 2015, 2016 and early 2017.

Further, the statement said mainland China-based banks have never been a source of any funding for AMC.

The statement outlined four previously announced transactions and made the following claims:

• The Starplex Cinemas acquisition was completely funded on December 16, 2015, with AMC’s cash-on-hand and approved by the US Department of Justice.
• The purchase of London-based Odeon & UCI Cinemas Holdings was a done deal on November 30, 2016, through AMC’s cash-on-hand, corporate borrowings, and shares of AMC common stock. The European Commission approved the transaction.
• The Carmike Cinemas Inc acquisition was completely funded on December 21, 2016, through AMC’s cash-on-hand, corporate borrowings, and shares of AMC common stock. The transaction was approved by the US Department of Justice.
• Stockholm-based Nordic Cinema Group Holding AB was acquired from European private equity firm Bridgepoint and Swedish media group Bonnier Holding and the acquisition was completely funded on March 28, 2017, through a combination of AMC’s cash-on-hand and corporate borrowings. The European Commission approved the transaction.

AMC Holdings said AMC did not receive any financing, guarantees, or credit enhancements from Dalian Wanda in any of the four transactions.

The statement went on to say that intercompany transactions between AMC and Wanda are “de minimis”. The company reported on March 10 this year in a Form 10-K, a mandatory performance report submitted to the Securities and Exchange Commission, that Wanda routinely reimburses AMC for general administrative and other expenses that amounted to $1,423,000 in 2014, $738,000 in 2015, and $461,000 in 2016. Reimbursements for the 12 months ending December 31 this year are expected to amount to less than $600,000.

A previously disclosed 10-K filing in 2016 reported Wanda’s capital contribution of $10m million to AMC received in February 2017 – without any increase in Wanda’s economic interest or voting rights in AMC – for one-time payments to officers, directors, and other personnel for services rendered in connection with merger and acquisition activity in 2016.

Tuesday’s statement said Wanda has no special claim to AMC revenue and the only current vehicle for making payments by AMC to Wanda is through the issuance of dividends, which are offered equally on a per-share basis to all AMC shareholders. AMC does make normal film rental payments, some of which indirectly go to Wanda-owned Legendary Entertainment when AMC screens films made by Legendary Entertainment and distributed by other studios.

“AMC is an American company run from its Leawood, Kansas, headquarters by our management teams located in the U.S. and Europe,” AMC CEO and president Adam Aron said. “Our shares are publicly traded on the New York Stock Exchange and our shareholder roster includes some of the biggest U.S.-based institutional investors, as well as Dalian Wanda, which owns a majority of our shares.

“Wanda has been a terrific shareholder, and we are grateful for Wanda’s support of AMC’s efforts over the past few years to grow our business, to increase our profitability, to sustain some 45,000 U.S. and European jobs for AMC employees, and to improve the movie going experience for our more than 350 million U.S. and European guests each year.

“Wanda does not actively participate in the day-to-day running of AMC beyond the Board of Directors service of three Wanda executives side-by-side with six American directors on the AMC Board. Accordingly, recent press reports notwithstanding, we greatly look forward to Wanda’s continued support as an AMC shareholder.”