January 25, 2021
AMC Entertainment, corporate parent to AMC Theatres, the largest exhibitor globally, Jan. 25 announced that since Dec. 14, 2020, it has successfully raised or signed commitment letters to receive $917 million of new equity and debt capital. This increased liquidity should allow the company to make it through the coronavirus-impacted winter well into 2021 — and hold off talks of bankruptcy.
The funding, which helped boost AMC’s stock 35% in pre-market trading, comes as studios continue to delay releasing major movies due to the ongoing pandemic that has reduced moviegoers to diehard fans.
Of the $917 million, $506 million is from the issuance of 164.7 million new common shares, along with the previously announced securing of $100 million of additional first-lien debt and the concurrent issuance of 22 million new common shares to convert $100 million of second-lien debt into equity.
In addition, AMC has executed commitment letters for $411 million of incremental debt capital in place through mid-2023, unless repaid before then, through the upsizing and refinancing of its European revolving credit facility.
Based on a variety of assumptions, including future attendance levels, AMC estimates that its financial runway has been extended deep into 2021. AMC also is presuming that it will continue to make progress in its ongoing dialog with theater landlords about the amounts and timing of owed theater lease payments.
“Today, the sun is shining on AMC,” CEO Adam Aron said in a statement. “Any talk of an imminent bankruptcy for AMC is completely off the table.”
Aron contends that with the renewed government push to vaccinate the general population, an increase in cinema attendance seems likely, although the executive notes that no one knows for sure the future course of this and other strains of the coronavirus, and therefore thoughts as to future cash needs of AMC are uncertain.
“To that end, we are grateful to the world’s medical communities for their heroic efforts to thwart the COVID virus,” he said. “Similarly, we welcome the commitment by the new Biden administration and of other governments domestically and internationally to a broad-based vaccination program.”