AMC Theatres is back in the danger zone after shuttering its doors back in March and gradually reopening since the end of July. The global pandemic has taken a toll on exhibitors nationwide and AMC is no exception. Coming on the heels of Regal Cinemas deciding to temporarily close its U.S. locations due to a lack of new content from studios to show moviegoers willing to go to the movies, AMC Theatres is now saying they’re having a cash problem and they could be fresh out by end of the year or early 2021 if moviegoers don’t return to cinemas in greater numbers.
The world’s largest exhibitor noted that attendance at the 494 of its 598 U.S. locations that it has opened in recent weeks is down approximately 85%. Attendance is limited in reopened states due to social distancing restrictions and huge markets such as Los Angeles and New York have yet to give the go-ahead to reopen theaters in their area. The theater chain is also suffering from a lack of blockbusters hitting the big screen thanks to studios shifting them to later dates in 2021. Their argument is that it isn’t feasible to debut a major release when movie theaters are closed in major cities. AMC had this to say in a recent financial report:
“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 202. 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 is said to be exploring several options, having already heavily leveraged and recently renegotiated its debt to improve its balance sheet. The options include packing an additional debt or exploring equity financing; renegotiating lease payments with landlords; selling theaters or other assets; and exploring joint-venture opportunities. The chain is currently burning more cash than it is making to keep theaters open and operational and they noted that it is difficult to predict how much money it will need to raise:
“There can be no assurance that the assumptions used to estimate our liquidity requirements and future cash burn will be correct, or that we will be able to achieve more normalized levels of attendance described above, which are materially higher than our current attendance levels, and our ability to be predictive is uncertain due to the unknown magnitude and duration of the COVID-19 pandemic.”
This turn of events is even more troubling for the moviegoing experience which seems to by dying a slow death due to the pandemic. I really hope these places can turn things around because I do not want to see movie theaters go under by any means.
What do YOU think will happen with AMC Theatres in the future?