Things are going from bad to worse in exhibition as AMC Entertainment said Tuesday its cash will be gone by late this year or early next and it’s exploring potential sources of additional liquidity, including asset sales, joint ventures or minority investments.
The nation’s largest movie chain, like others in the industry, has been struggling to make ends meet after being shuttered for months due to COVID followed by a rocky restart. The chain has reopened internationally and in most U.S. states although key markets like New York and Los Angeles remain closed. Studios have shifted major releases, making it harder to attract audiences.
Chains have pointed to New York as particularly problematic. Theaters have been shuttered across the state since mid-March with no guidelines for reopening or ballpark timeframe of when it may happen.
In an SEC filing, the company said it “believes its cash burn to date is in line with the Prior Update. However, given the reduced movie slate for the fourth quarter, in the absence of significant increases in attendance from current levels or incremental sources of liquidity, at the existing cash burn rate, the Company anticipates that existing cash resources would be largely depleted by the end of 2020 or early 2021. Thereafter, to meet its obligations as they become due, the Company will require additional sources of liquidity or increases in attendance levels. The required amounts of additional liquidity are expected to be material.”
AMC has raised close to $40 million to date by selling shares. In a major debt restructuring announced over the summer, it brought in several hundred million dollars in cash, reduced interest payments and extended maturities on loans. But AMC and other exhibitors figured they’d be back on their feet sooner than appears to be the case. Reopening theaters, as the chain has been doing, costs more than keeping them closed but either way the situation has become dire.
AMC said it’s also looking at additional debt and equity financing and further renegotiations with landlords regarding its lease payments. It stopped short of saying it was considering an outright sale but said it would consider joint-venture or other arrangements with existing business partners. AMC is majority owned by Chinese conglomerate Wanda. Investment firm Silver Lake is also an investor.