'Meme Stock' Rally Rescues AMC Theaters From $600 Million Debt

This week's bizarre "meme stock" rally, which has delivered lottery-like windfalls for holders of GameStop stock, also wiped out $600 million in debt owed by the AMC theater chain. Polygon reports: That's because, on Wednesday, a private equity firm named Silver Lake -- and private equity firms are popularly considered the "bad guys" in this snobs-versus-slobs drama -- elected to convert the corporate bonds it held into AMC Entertainment Holdings stock. Although the theater chain's stock price has tumbled and soared since the move, the debt relief is permanent. Just Monday, AMC was warning investors that "there is substantial doubt about our ability to continue as a going concern." Wiping out more than half-a-billion dollars in debt, though, should take a lot of pressure off AMC in the short term. "A week ago, it was not crazy to think this company was doomed," Bloomberg's Matt Levine wrote on Thursday. "Now it is entirely possible that it will survive and thrive and show movies in movie theaters for decades to come because everyone went nuts and bought meme stocks this week." Yet, by converting their AMC debt holding to AMC stock, the Silver Lake equity firm has gotten hurt by a falling stock price, too. The conversion price for the bonds Silver Lake held was $13.51; Silver Lake cashed in on Wednesday, when AMC's shares ended the day at $19.90, more than 400% better than the day before. Smart move, right? Well, AMC's share price at publication time Friday was about $15 -- but it closed Thursday at $8.63. So, unless Silver Lake found some other sucker to buy the stock before it bottomed out, they've been riding a roller coaster that at best has them about 5% to 7% ahead of their original position, with no guarantee of staying there.

Read more of this story at Slashdot.