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Sept. 20 (NBD) -- AMC Entertainment (AMC) raised 600 million U.S. dollars from Silver Lake Group (Silver Lake) through issuing senior unsecured convertible notes due 2024 to certain affiliates of the latter, the movie theater chain announced last Friday in a filing to the U.S. Securities and Exchange Commission.

As part of the transaction, private equity firm Silver Lake will have one seat on the Board of AMC and a two-year right of first refusal on certain future transfers of AMC shares by Dalian Wanda, the controlling shareholder of AMC. Moreover, AMC also agreed to add a new independent director to its Board who will have significant technology experience and knowledge, with support from Silver Lake.

The proceeds from the convertible notes have been used to repurchase approximately 24 million shares of Class B common stock from Dalian Wanda, and to pay out a special cash dividend of 1.55 U.S. dollars per share to all holders of the U.S.-listed company's Class A and Class B common stocks, payable on September 28, 2018. But the special dividend will no longer being paid on the AMC shares repurchased from Wanda.

Assuming full conversion of the notes issued to Silver Lake into AMC Class A shares, the stake that Dalian Wanda holds in AMC will be trimmed to 38 percent from current 50.01 percent.

In 2012, Dalian Wanda acquired a majority stake in AMC for 2.6 billion U.S. dollars, which was Dalian Wanda's first foray into the U.S. market. Dalian Wanda at the time also agreed to invest no more than 500 million in the cinema company to strengthen AMC's balance sheet.

With Dalian Wanda's capital injection and AMC CEO Adam Aron's leadership, AMC acquired three cinema chains in the Europe and the U.S., Odeon&UCI, Nordic and Carmike during 2016-2017 period.

However, after-effects of aggressive expansion began to emerge. Due to huge increase in operating expenses, AMC still incurred unaudited losses of 487 million U.S. dollars for the fiscal year of 2017 despite a 60-percent rise in revenue.

The cinema chain struggled to turn losses into gains in the first half of 2018, but still had 7.562 billion U.S. dollars in gross liabilities as of June 30, 2018.

Besides AMC, Dalian Wanda bought Australia's second largest cinema chain HOYTS in 2015.

Ni Shuang, media analyst with Pacifit Securities, explained to NBD that Dalian Wanda's acquisition of overseas cinemas and film companies is aimed to integrate upstream content and downstream cinema chains, and to improve overall profitability by linking domestic and overseas markets.

Email: gaohan@nbd.com.cn