AMC and Loews complete merger

Private equity-backed theatre-chains AMC Entertainment and Loews Cineplex Entertainment have completed their tie-up first announced last summer.

AMC Entertainment and Loews Cineplex Entertainment Corp. finalised their merger today, combining what had previously been the respective second- and third- largest movie theatre chains in the US.

AMC and Loews completed the merger first announced last June.

JPMorgan Partners and Apollo Management gained control of AMC in July, 2004, paying $1.67 billion for the company. During the same month, The Carlyle Group, Bain Capital and Spectrum Equity Investors acquired Loews in a $1.5 billion secondary deal. Oaktree Capital Management and Onex Corp. were the sellers in the original Loews sale.

The new combined business will carry the AMC Entertainment banner, and maintain AMC’s headquarters in Kansas City Missouri. Peter Brown will also continue to head theatre chain, which now has interests in roughly 415 theatres worldwide.

Antitrust approval for the merger required the combined company to sell off 10 theatres.

The private equity ownership, as it is broken down in a press release issued today, makes AMC’s backers the largest stakeholders in the new company. Apollo and JPMorgan each hold roughly 21 percent of the company, while Bain Capital and Carlyle each control 15 percent stakes and Spectrum maintains a 10 holding. AMC management and other co-investors control the balance, which is around 18 percent.

As part of the merger, AMC refinanced $850 million of debt, and issued $325 million of senior subordinated notes. The new facilities will be used to refinance the Loews debt, and provide ongoing liquidity. The $1.2 billion of equity invested into the company by the private equity sponsors, will stay in place, according to Fitch.

A source close to one of the sponsors, however, confirmed that the investors, through the merger, were able to return proceeds to their limited partners.