Sunday, September 8, 2013

Carlyle Group Schooled Wanda Makes PEU Move with AMC Entertainment

The Globe and Mail suggested investors stay away from AMC Entertainment's upcoming IPO. 

AMC Entertainment Inc. is inviting investors to an initial public offering with back-row seats and no chance of buttered popcorn.
Reasons for spurning the IPO include AMC's already bloated debt position, the company's need for major capital investment for theater upgrades, shareholders getting less than standard voting rights.

The real mystery, then, is why Wanda doesn’t put the money in itself, rather than ask outsiders to underwrite its risky investment plan. The Chinese group’s revenue is 10 times that of AMC, and box office sales in China are still growing. If Wanda is reluctant to follow its investment, it’s hard to imagine a storybook ending to this movie.
Wanda's move is typical PEU, where storybook endings mean monetization at levels many times the initial equity investment.  An IPO is but one vehicle for PEU's to profit.  How much did Wanda charge AMC in management fees and how much did they pay themselves in special dividends and distributions? 

They can see in AMC Entertainment's books the tools JPMorgan, The Carlyle Group and Bain Capital used to pull money out of AMC.  My guess is this is a form of Chinese PEU imitation.   It has the odor of many PEU deals.