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Credit: AMCAs per Inside the Magic’s last update, the was planning to close all for 6-12 weeks. Now, debt rating agency S&P Global Ratings have downgraded ’s credit rating from ‘B’ to ‘CCC-.’
This business credit rating is used to denote, “Default imminent, with little prospect for recovery.” With the rise of streaming services like Netflix, Hulu, and more recently, +, many around the country had seen a reduction in business prior to the ongoing pandemic outbreak.
Since being forced to close due to federal and state social distancing regulations and shelter in place orders, like AMC have fallen on even harder times.
Financial analyst S&P Global stated, “We expect Inc.’s (AMC) theaters will remain closed beyond June due to the impact of the global. We do not believe AMC has sufficient sources of liquidity to cover its expected negative cash flows past mid-summer.”
At the end of the 2019 fiscal year, AMC reported a $5+ billion deficit and losses totaling $149 million. ’s subsidiaries, including Odeon Cinemas, could also be impacted should the theatre chain close its doors permanently.
S&P did acknowledge that, “While unlikely, we could raise the rating if AMC were able to secure additional liquidity without further burdening its capital structure and if we expected the would be able to generate substantial cash flow in 2021.”
The analysts continued that they would need “a view that the would return to normalized levels in 2021.” This is a long shot, as production studios have announced that they will be skipping theatrical releases entirely for certain upcoming movies, further hurting the .
Most recently, Walt Studios confirmed that Artemis Fowl, originally slated for a May 29, 2020 release date, will go straight to streaming on the + platform.
It is not yet known how the potentially lengthy closure will impact other chains besides , including and .
The Inside the Magic team will the situation and bring you updates as needed.