AMC Entertainment has announced that its money will go out by the end of the year and Walt Disney has become the new state-of-the-art content company to reorganize operations around streaming.
With New York and Los Angeles markets and theaters reopening to a limited audience due to lack of new studio rent, the heavily indebted AMC said in an SEC filing that it had enough cash to survive the end of next year and needed “materials” Will fall. Extra capital to drive that issue forward. It is not given that the capital will appear, or suffice it, and will re-speculate on Wall Street that the AMC may be forced to file for bankruptcy.
“There is a significant risk that these potential sources of liquidity will not be realized or the company will be insufficient to produce the required amount of additional liquidity content until it is able to achieve normal levels of operating revenue,” AMC’s filing said.
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“I don’t really know how they would go bankrupt,” said one Wall Street analyst. “They should be out of cash by the end of January. And most companies don’t file when they have ten million in cash. Attorneys will have to pay. “
At the close, AMC shares were down 13 percent. Cinemark, Marcus and National Cinemedia fell 8%, 7.2% and 9%, respectively. All hours were frozen in subsequent trading.
AMC is in a tight corner, as it admits. Its debt is about 5 5 billion and high debt means high interest expenses. AMC, which owns the majority of Chinese group Wanda, is linked to the pre-epidemic in terms of acquisitions, dividend payments and upgrades to its theaters.
In contrast, Cinemark says it has about 17 months of liquidity and less than half of AMC’s debt. (One analyst attributes the decline in Cinemark’s stock to the fact that it is becoming more difficult for short AMC stocks. Short sales occur when investors borrow shares, sell them and then return to the buyer to buy them back, conditionally. Prices will fall. “The only way to shorten the performance is for investors to shorten Cinemark.”
AMC noted in an SEC filing this morning that it has raised close to 40 million in share sales, which is good. But its cash burn is about 11 115 million a month and as of August 30, it had about 500 500 million in funding. The company said today it is considering a new round of asset sales, joint ventures, sale of minority investments and sale of stock or bonds. It recently sold its Baltic theaters and, a source said, was in talks to divest its Nordic cinemas.
Industry sources believe that the first property on the block in the bankruptcy auction will be AMC Classic, a former Karmic cinema theater acquired in 2016.
Meanwhile, Eric Walde, an analyst at B Relay Securities, said the sale of the property is possible but it is a “buyer’s market” – so prices will be lower. “Given the impossibility of meeting any additional debt financing, we would expect continued decline under additional equity ingings fringes and / or minority investments in the company’s equity.”
AMC restructured its debt in July which gave it some runway but it will last that long if the moving is not resumed properly.
Wold called the absence of New York and LA a true disability. AMC has launched its U.S. More than 0% of theaters have opened, but the lack of new film content has reduced the attendance of similar theaters by 85%, he said in a note this morning. And while only 17% of AMC’s home theaters remain open (some will soon be online in North Carolina and Washington Washington), the “most productive theaters” in California and New York still have an uncertain re-opening timeline. He said that out of 23% of AMC’s 2019 revenue theaters, 17% more theaters have reopened. It “is not surprising to see the studio advancing the film’s release calendar in these circumstances.”
“If things go on like this and a lot of movies don’t come and they stay open, they will be pressured,” said Meghan Durkin, an analyst at Credit Suisse. Debt restructuring “could kick the road down in 12-18 months at some interest expense, but their cash burn rate is more than double that of Cinemark.”
Regal parent Cineworld decided it was too expensive to stay open and said it was reopening almost all theaters in the US and UK.
MG in a note on October, following the news that MGM has moved the next James Bond film No time to die From November 2021, Loop Capital analyst Alan Gold called it a “potential death knell for AMC.” Disney recently announced that it belongs to Pixar The soul Will follow Mulan Disney Straight.
According to Gold’s forecast, domestic office fees fell 95% in the third quarter and 85% in the fourth quarter. It sees બ 2.4 billion in domestic office fees this year and 6 8.6 billion in 2021, down from .3 11.3 billion in 2019. The number of screens is expected to drop to about 36,000 in the next two years, down from the current 411,000.
The epidemic of covid and theater grief is already focused on ongoing streaming. On Monday, Disney announced a rare restructuring of its content and distribution business units to increase streaming potential, following similar steps by AT&T’s Warnermedia and Comcast’s NBC Universal.
One is that Regal’s closure will benefit open-air theaters. AMC CEO Adam Arrow has said that the exclusive windowing deal with Universal will take it further with a handful of movies including Focus Features. Cajioner, Come Play, And Let him go And Universal Crows: A New Era.
Also, Aaron has been good at finding innovative cash. The AMC raised 500 500 million in debt at the beginning of the epidemic and another 200 200 million for debt restructuring, which reduced debt and interest costs and cut some repayment deadlines. Silver Lake, the partners have invested 600 600 million in AMC in 2018 but it is not known whether the investment company will bail them out.
Silver Lake was not immediately available for comment.
AMC declined to comment.
AMC leases 875 theaters (10.1K screens) and owns or partially owns 62 theaters (561 screens) worldwide. Stateside, AMC operates or has a partial interest in seven theaters and scre 73 screens.
Bankruptcy is nothing new to the industry and some pundits believe that the American screen will not be underestimated in the entertainment landscape. Two decades ago, a handful of exhibitors went bankrupt and bought each other after increasing debt through overbuilding. Between 1999 and 2001, bankruptcy included Regal, Karmic, Lois Cineplex, United Artists, General Cinema, Edward Theaters, Mann Theaters, Dickinson Theaters, and Silver Cinema.
B. Riley’s old world is hanging on to AMC with a “neutral” rating, which he acknowledged could be “very optimistic due to our concern for continued liquidity.” But he also said he thinks “given the green light in the near term that major U.S. markets should still open, the reaction to both the company’s share prices and its ability to secure capital could be extremely positive.”
Anthony D’Alessandro contributed to this report