December 11, 2020
AMC Entertainment, parent to the world’s largest theatrical chain, AMC Theatres, said it has received $100 million in stopgap funding to remain afloat financially. The deal with Mudrick Capital Management, disclosed in a Dec. 11 regulatory filing, pays the investment firm 15% in annual interest in exchange for 13.7 million AMC shares.
With coronavirus infections and deaths spiking across the country, movie theaters remain either shuttered (Regal Cinemas) or operating under limited capacity such as AMC and Cinemark. AMC said theatrical attendance has declined 92% since the previous-year period.
The chain said that in the absence of additional liquidity, it anticipates that its cash resources will be depleted in January 2021. To remain viable through next year, AMC estimates its needs approximately $750 million of additional liquidity to fund cash requirements, which include $400 million in deferred rent obligations. The chain is burning through $125 million monthly to maintain operations.
In addition to the pandemic, AMC blamed its fiscal situation and future on delayed studio releases and Warner Bros.’ decision to release all movies concurrently in theaters and on the HBO Max streaming service.
“[The] delays of major movie releases, or the direct or simultaneous release of movie titles to the home video or streaming markets in lieu of theater exhibition, have led to theater closures, prevented the opening of theaters in major markets and have had, and are expected to continue to have in the future, a material adverse impact on theater attendance levels and our business,” AMC said in the filing. “These challenges have been exacerbated by the announcement by Warner Bros. that its entire studio film slate for 2021 will move to simultaneous release, which may result in other studios adopting a similar strategy.”
As of Nov. 30, AMC was operating at 404 of its 594 U.S. theaters, with limited seating capacities and during limited opening hours. The company’s shuttered domestic screens include theaters in some of its major markets, such as New York City and in California. AMC is operating at 108 of its 359 leased and partnership international theaters, with limited seating capacities and during limited opening hours. Through Nov. 30, AMC said it has seen an 86% decline in international moviegoers compared to last year.
“Our current cash burn rates are not sustainable,” AMC said. We currently estimate that if our attendance levels do not significantly improve during … 2021, then we believe the liquidity shortfall would be greater than the estimated $750 million minimum shortfall, which if not addressed would prevent us from continuing as a going concern.”