AMC Theatres States They Have ‘Substantial Doubt’ About Survival

in Entertainment, Movies

AMC closed

Credit: Frederic J. Brown/Getty Images

As per our previous reports, AMC Theatres, North America’s largest movie theater chain, have been struggling financially throughout their temporary closure during the coronavirus pandemic.

In an April fiscal report, MKM Partners financial analyst Eric Handler stated, “Based on our view that theaters will be closed until at least August and our belief that AMC lacks the liquidity to stay afloat during that time, we expect the company will soon be faced with filing for bankruptcy.”

AMC theatre closed signs
Credit: Frederic J. Brown/Getty Images

Handler also downgraded AMC theater stock from “Neutral” to “Sell” at that time. Soon after that report was released, AMC stated a new debt offering would allow them to sustain operations until they could partially reopen, hopefully by the Thanksgiving holiday.

Now, however, AMC has submitted a filing to the Securities and Exchange Commission in which they released preliminary 2020 earnings results. The movie theatre giant anticipates that they will have lost between $2.1 billion and $2.4 billion during the first quarter.

AMC also stated that its overall revenue had fallen to just $941.5 million. Last year, it’s first quarter earnings totaled $1.2 billion. The filing said, “We are generating effectively no revenue.”

AMC
Photo: Noam Galai / Getty Images

On April 30, movie theater chain AMC said that it’s cash balance was $718.3 million.

Although AMC CEO Adam Aron has barred Universal Studios films from their theatres, they have discussed reopening for late summer releases, such as Disney’s live action Mulan (should it not be released directly to streaming service Disney+).

Until that happens, though, AMC has been relying on their limited cash reserves.

This week’s filing stated, “We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because we have never previously experienced a complete cessation of our operations, and as a consequence, our ability to be predictive is uncertain.”

amc interior
Credit: Disney

The statement continued, “If we do not recommence operations within our estimated timeline, we will require additional capital and may also require additional financing if, for example, our operations do not generate the expected revenues or a recurrence of COVID-19 were to cause another suspension of operations.”

“Due to these factors, substantial doubt exists about our ability to continue as a going concern for a reasonable period of time,” it said.

AMC currently has approximately 1,000 movie theaters and 11,000 screens worldwide, so a complete closure would deeply impact movie goers on a global scale. It would also affect Walt Disney World Resort visitors specifically, as there is an AMC location at Disney Springs.

Box office ticket sales for all theater chains have been dismal during the coronavirus outbreak. Every major theater chain in the United States, including AMC and Cinemark, has been dealing with theater closures and loss of ticket sales.

The long-term impact of the coronavirus pandemic on the theater industry remains to be seen.

amc exterior
Credit: Disney
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