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The movie theater industry has been severely hit by business lockdowns and health restrictions on indoor gatherings. (Photo by Tom Cooper/Getty Images)
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AMC Entertainment
is scrambling to raise cash as it fights to survive a steep drop-off in attendance and a lack of blockbuster premieres.
The largest theater-chain operator said Tuesday it was trying to find new ways to raise the money and could run out of its existing cash by the end of the year or early next year.
In a regulatory filing, AMC (ticker: AMC) said it “will require additional sources of liquidity or increases in attendance levels. The required amounts of additional liquidity are expected to be material.”
The company has been shoring up its finances since the summer, bracing against a sharp drop in box office sales after coronavirus-related shutdowns earlier this year. While it has managed to reopen 83% of its domestic theaters since those lockdowns eased, it still can’t open in some of its most lucrative locations: New York, Los Angeles and San Francisco, which combined make up 25% of domestic box office sales.
It reorganized debt in August and recently announced a new 15 million share offering. It has already sold 9 million of those shares, raising $37.8 million. AMC stock dropped 7% on Tuesday after the filing.
The company said its other options to raise cash include asset sales, lease renegotiations and joint ventures. But AMC said there was a “significant risk” these would not happen.
Of course, AMC isn’t alone. The movie theater industry has been severely hit by business lockdowns and health restrictions on indoor gatherings. Making matters worse, studios continue delaying the release of movies that would have drawn big box office sales in ordinary times.
Last week, U.K.-based
Cineworld
(CINE.London) announced it would shut its theaters, which operate in the U.S. under the Regal brand, because of the lack of releases and the inability to operate in key markets.
B. Riley analyst Eric Wold said theater operators could bounce back quickly eventually, but it will take a return to nearly normal business conditions. That doesn’t seem likely in the immediate future.
“The near-term outlook for the exhibition industry (both domestically and internationally) remains extremely uncertain,” Wold, who rates the stock Neutral, wrote on Tuesday. “A Neutral stance for AMC shares may be too optimistic given our continued liquidity concerns.”
Wold has a $4.50 price target on AMC.
Write to Liz Moyer at [email protected]
