AMC Theatres Is Expected to Run Out of Money in 6 Months

Debt ratings agency S&P Global Ratings has reduced AMC Entertainment Holding's credit ratings on liquidity concerns as the impact on the mega-exhibitor's theaters takes a toll on its available cash on hand.

"Given our expectations for a high rate of cash burn, we believe the company will run out of liquidity within the next six months unless it is able to raise additional capital, which we view as unlikely, or attendance levels materially improve," the agency said.

On Sept. 24, AMC said it would look to raise more fresh cash, in part for debt refinancings and repayments amid the coronavirus pandemic, via an equity distribution agreement for the potential issue of 15 million shares agreed with Wall Street banks.

That move came as the exhibition giant looks to continue reopening its U.S. theater circuit and survive the pandemic after a debt restructuring.

The debt ratings agency downgraded AMC's credit rating to CCC-, from CCC+, on weak liquidity, and with a negative outlook. S&P Global Ratings, in March 2020 as the pandemic first took hold, signaled it would review and potentially downgrade AMC's ratings amid the COVID-19 crisis.

In July, AMC completed a debt restructuring agreement with its bondholders that included $200 million in fresh cash and the Silver Lake Group purchasing $100 million in new senior notes. More recently, the cinema chain said it raised $77 million by selling nine theaters in Europe's Baltic region.

In its latest report on the exhibition giant, S&P Global argued AMC "continues to struggle operationally and financially because U.S. attendance remains weak after reopening, additional major theatrical releases are delayed and its cash burn might accelerate now that its theaters are open."

S&P Global said continuing reduced capacity at theaters and wary consumers continuing to embrace streaming platforms was likely to persist into 2021.

"The negative outlook reflects our view that a default, distressed exchange, or redemption appears to be inevitable within six months, absent unanticipated significantly favorable changes in the issuer's circumstances," the agency added.

On Oct. 1, with film production slowly restarting and cinemas reopening amid the COVID-19 pandemic, Credit Suisse analyst Meghan Durkin said Hollywood's content pipeline looked "increasingly risky" as a question mark remained over how comfortable filmgoers will be to return to their local multiplex, given the pandemic's current trajectory.

And on Wednesday, dozens of influential filmmakers joined the National Association of Theatre Owners, the Directors Guild of America and the Motion Picture Association in calling on Congress to provide assistance to struggling theater owners impacted by the ongoing COVID-19 crisis. They warned that many cinemas may not otherwise survive.

Most exhibition companies — or 93 percent — weathered losses of 75 percent in the second quarter of 2020 after moviegoing came to an unprecedented stop in mid-March. While more than half of theaters are now reopened, Hollywood continues to delay its major fall releases out of concern that many moviegoers aren't yet ready to return.

UltimateMarvel wrote:Haven't been to an AMC in a long time. I go to my local Cinemark theater and they are much cheaper and have nice electric recliner seats. But I drove by my local theater last week and very few cars were there, I hope it doesn't close.

UltimateMarvel wrote:Yeah, it's pretty nice. $5/tickets before 1PM and usually a lot less people but I don't like watching that early, $7/ticket normally, $9/ticket opening weekend movies. They actually renovated not too long ago and it's very much approved from what it used to be and now with the new chairs, I like it a lot. It's my go to theater. I wouldn't mind if Cinemark dominated AMC theaters.

UltimateMarvel wrote:You guys don't have Cinemark over there? Never heard of Regel before but we do have AMC.

joey con carne wrote:Closest Cinemark for me is in New Jersey. We have AMC, Showcase, and Regal here in New York. There's also a smaller chain called Bowtie Cinemas which does not have reserve seating or recliners. Just a regular theater. Smaller screens and less seats. I really like them. Feels more "old school"

joey con carne wrote:Dang, that's a shame.

Definitely looking forward to going to the theater at some point. Probably not for another year or two LOL.