AMC theatre chain doubtful it can stay in business
Company warns it will need additional capital if operations don’t resume
AMC Entertainment Holdings Inc. said its ability to stay in business is in jeopardy if it can’t raise enough cash to fund operations during the prolonged closure of its theaters due to the coronavirus pandemic.
AMC said in a regulatory filing on Wednesday that its cash balance as of April 30 was $718.3 million, enough to fund its expected resumption of operations in the summer or later. But it warned its liquidity would depend on when its operations can fully resume, as well as the timing of movie releases and its ability to generate revenue.
“If we do not recommence operations within our estimated timeline, we will require additional capital,” the company said. It added, “Such additional financing may not be available on favorable terms or at all.” The Leawood, Kan.-based theater operator’s world-wide theaters have suspended operations through June, effectively generating no revenue. The company said “substantial doubt exists about our ability to continue as a going concern for a reasonable period of time.” AMC, Cineworld Group PLC’s Regal Entertainment Group and Cinemark Holdings Inc. — the nation’s top three theater chains — have been closed since March and have furloughed employees. The easing of government restrictions wouldn’t immediately solve the problem, AMC said. The company said distributors could delay releasing of new films until operating restrictions are eased more broadly.
The theater industry was already struggling with high fixed costs, mounting debt and stagnating attendance as in-home streaming options proliferated before the pandemic. With the lockdown, it is unclear when, and if, customers will feel comfortable returning to cinemas. Analysts and industry veterans say permanent closures are likely in the industry, with Cinemark permanently shutting down some locations in recent weeks. AMC said it sees pentup demand when the pandemic subsides, but can’t predict if its business can return to normal levels. It also warned of difficulties in its relationships with landlords, vendors, movie distributors, customers and employees during the suspension of operations.
The company also expects to post a wider loss of $2.12 billion to $2.42 billion for the first three months of the year, compared with a loss of $130.2 million for the same period last year, as it sees impairment charges of $1.8 billion to $2.1 billion. It reported preliminary first-quarter revenue of $941.5 million, down from $1.2 billion in the year-ago period.