AMC warns bankruptcy is on the table as cash runs low

A professional medical employee donning a mask walks close to the AMC motion picture theater in Moments Square amid the coronavirus pandemic on Might 7, 2020 in New York Metropolis.

Alexi Rosenfeld | Getty Photographs

AMC has agreed to market as lots of as 15 million shares of its inventory, but equity in the firm could shortly be worthless if the major theater chain in the globe documents for bankruptcy.

On Tuesday, AMC ongoing to alert traders about its dwindling income pile and stated it might have to file for Chapter 11 individual bankruptcy if it is not able to protected further sources of liquidity.

Shares of the organization tumbled more than 11% on the news. AMC’s inventory, which has a industry benefit of all around $387 million, has plunged 56% so significantly this yr.

Chapter 11 bankruptcy would most likely permit AMC to keep in small business when it reworks its debts and types out new lines of liquidity.

Film theater chains in the U.S. have been slammed by the ongoing coronavirus pandemic, which first shuttered theaters and then drove absent buyers and significant Hollywood blockbusters.

AMC was specifically vulnerable due to the fact of the extra than $4.75 billion in credit card debt it had amassed prior to the disaster from outfitting its theaters with luxury seating and from obtaining opponents these types of as Carmike and Odeon. AMC has around 1,000 theaters and a lot more than 11,000 screens globally.

“We will have to have important amounts of supplemental liquidity and there is substantial question about our capability to proceed as a heading issue for a sensible period of time of time holders of our Course A popular inventory could undergo a overall decline of their expense,” the organization wrote in the SEC submitting.

When New York Gov. Andrew Cuomo gave motion picture theaters hope above the weekend when he introduced that theaters exterior of New York Metropolis could reopen. Studios had explained to film theater operators that they would withhold key releases if New York remained shut.

Also on Tuesday, AMC launched a preliminary earnings report. The company mentioned it experienced acquired about $119.5 million in income all through the 3-thirty day period period finished Sept. 30. That’s a steep fall from the $1.32 billion AMC tallied for the duration of the exact same period of time last yr.

For the initial nine months of 2020 AMC took in revenue of $1.08 billion, a portion of the $4.02 billion it garnered in the course of the identical period final yr.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular

To Top