AMC Races To Raise Cash As Time Runs Short For Theater Giant
Movie theater giant AMC Entertainment is scrambling to raise cash by issuing shares, even as it warns that its efforts to right its sinking finances may fall short.
Hammered by coronavirus restrictions and a sharp economic downturn, AMC, the world’s largest theater chain, notified federal regulators on Tuesday (Oct. 20) that it plans to sell up to 15 million shares of Class A common stock.
However, AMC said its financial outlook remains grim, and that without either a major injection of liquidity or a “significant” uptick in attendance at its cineplexes, it may be forced to file for bankruptcy, according to the firm’s filing with the Securities and Exchange Commission (SEC).
AMC said it currently has just under $418 million in cash left on hand to pay its bills, a stockpile that, at the company’s current burn rate, will run out at the end of the year or in early 2021.
That assessment mirrors a recent S&P report that warned AMC may only have enough cash to last six more months unless it raises substantial additional capital.
“To meet its obligations as they become due, the Company will require additional sources of liquidity and/or increases in attendance levels,” the theater chain told the SEC. “Due to these factors, as previously disclosed, substantial doubt exists about the Company’s ability to continue as a going concern for a reasonable period of time.”
In the few months since AMC theaters reopened after the initial lockdown, the chain had filled just 2.6 million seats as of Oct. 16, a decline of 85 percent compared to the same period a year ago, the company told the SEC.
AMC is also looking for additional ways to raise more money or alleviate its expenses.
Previous sales of shares raised more than $54 million, AMC noted, with the theater chain looking to engage in “further renegotiations” with the landlords that control its theater leases.
The company said it is also exploring asset sales and joint ventures, as well as bringing in minority investors.