In an effort to manage its debts and position itself for future growth, AMC Entertainment Holdings has announced an agreement with its creditors to extend the maturity of up to $2.45 billion in debt. The news has sent the theater chain's shares soaring by 12.6% in late afternoon trading.

As part of the agreement, AMC will transfer certain leases, property, and related assets and rights for 175 theaters to a newly formed subsidiary named Muvico. This includes the intellectual property of the AMC brand name. By taking these steps, AMC aims to restructure its obligations and improve its financial outlook.

The debt extension will extend the maturities from 2026 to 2029 and beyond. Furthermore, the agreement allows AMC to reduce its debt by $464 million by converting exchangeable notes into equity. CEO Adam Aron expressed confidence in the company's future, stating, "The box office challenges of the first half of 2024 are now in the rear-view mirror. The recovery momentum is back. We expect strong year-over-year box office growth in the back half of 2024, continuing into 2025 and 2026."

AMC's shares have experienced significant volatility in recent months, particularly following the involvement of stock influencer Keith Gill, also known as "Roaring Kitty," in May. The stock has seen an 18% decline in value so far this year.

In addition to the debt extension, AMC also plans to issue $1.2 billion of new secured term loans due in 2029. This will be in exchange for an open market purchase of senior secured term loans due in 2026. The move reflects AMC's ongoing efforts to refinance and amend its credit agreements.

Since September last year, AMC has managed to reduce its gross debt outstanding by $516 million through a series of refinancing transactions. The company remains focused on strengthening its financial position and capitalizing on the anticipated rebound in the box office industry.

Overall, the agreement with creditors, combined with AMC's proactive financial measures, positions the theater chain for a promising future. With expectations of box office growth in the coming years, AMC aims to navigate the challenges posed by the pandemic and emerge as a resilient and successful player in the entertainment industry.