A sign notifies visitors of a limited schedule outside an AMC movie theater in Omaha.
Dan Brouillette/Bloomberg
AMC Entertainment’s CEO says bankruptcy is “completely off the table” given that it has raised nearly $1 billion in extra cash since December, about half of it disclosed on Monday.
In a securities filing, the theater-chain operator said it has agreed to a new $411 million loan for its European operations through 2023. Together with a series of new stock sales and bond deals since mid-December, it has raised $917 million in cash to keep it afloat this year.
“Today, the sun is shining on AMC,” said CEO Adam Aron in a statement.
Shares of AMC (ticker: AMC) jumped 36% on Monday, while the S&P 500 was 0.4% higher. The theater chain’s stock is still down 31% over one year.
AMC’s fundraising is in addition to the $1 billion it raised between April and November, as the early days of the pandemic forced it to shut theaters and severely restrict occupancy at locations that were allowed to reopen.
“This means that any talk of an imminent bankruptcy for AMC is completely off the table,” Aron said. AMC raised the possibility of a bankruptcy filing last fall, admitting it was burning through cash and might run out as early as this month.
The hard times are not over for AMC and other theater operators. Vaccines are rolling out to stop Covid-19, but public willingness to take the vaccines, plus time, will be needed for a return to even semi-normal life.
Domestic box-office revenues in 2020 totaled $2.1 billion, down 82% from 2019, according to Goldman Sachs. Almost all of the sales—85%—came in the first quarter.
Goldman downgraded the big-screen chain IMAX (IMAX) to Neutral from Buy, but raised its target for the stock price to $17.90 from $15.60, citing its recent outperformance. Shares of IMAX rose 2.3% on Monday and are up 5% over one year.
The bank’s analyst also raised the price target on Cinemark (CNK) to $16 from $11, but maintained a Neutral rating, citing increased box-office forecasts. Shares of Cinemark rose 14.9% on Monday and are down 30% over one year.
Theater operators have struggled during the pandemic, alongside other lockdown sufferers in the restaurant, hotel, travel and out-of-the-home amusement categories. In addition to business shutdowns, theaters have had to figure out how to bring in box-office sales with few blockbusters to showcase.
Movie studios have either pushed back the premier of big movies or moved them to streaming, hoping to drum up interest for at-home movie watchers.
Some recent premier delays include the next installment in the Bond series No Time to Die, now slated for October instead of April, which was already a delay; Cinderella, to July from February, and The King’s Man to August from March.
Ultimately, the movie industry is hoping experience-starved audiences will return to the cinema once the U.S. is able to put Covid-19 safely in its rearview mirror.
AMC continues to negotiate with theater landlords about rent payments, and it says the cash raised to date will help it stay operational through July.
“Given the push to vaccinate the general population, an increase in cinema attendance seems likely, although AMC notes that no one knows for sure the future course of this and other strains of the coronavirus, and therefore thoughts as to future cash needs of AMC are uncertain,” Aron said in the statement.
In addition to the loan, which boosts an existing $100 million credit line, AMC said Goldman Sachs and B. Riley will handle the sale of up to 50 million shares of its common stock.
Despite having 438 of its 593 locations open in the U.S., attendance in the fourth quarter was down 92% from late 2019, AMC said. Overseas, attendance was down 88.6%.
AMC said in a regulatory filing that its fundraising might take it through the end of the year in terms of cash needs if attendance improves. Right now, that seems like a big if.
Write to Liz Moyer at [email protected]
