The COVID-19 pandemic has hit some industries harder than others. Cinemas were among the worst-affected businesses, as lockdowns and social distancing guidelines kept millions of cinema-goers away from the silver screen. The effect of that is now being felt as AMC Entertainment, the world’s largest cinema chain, is reportedly close to bankruptcy if it does not receive a fresh infusion of funds.
Even as it has reopened 494 of its nearly 600 outlets in the US, attendance is down 85 per cent compared to last year. Unless ticket sales pick up, AMC warns that it may run out of cash by year-end or by early 2021.
Bloomberg reported that AMC’s lenders have held preliminary talks about providing it with financing in case it decides to file for Chapter 11 court protection (which could result in a reorganization of its debts).
In its filing with the SEC, AMC said that “given the reduced movie slate for the fourth quarter, in the absence of significant increases in attendance from current levels or incremental sources of liquidity, at the existing cash burn rate, the Company anticipates that existing cash resources would be largely depleted by the end of 2020 or early 2021.”
It said it is exploring potential sources of additional liquidity including additional debt and equity financing, renegotiations with landlords over lease payments, asset sales, joint-ventures and minority investments in its capital stock. However, AMC says there is a “significant risk that these potential sources of liquidity will not be realized or that they will be insufficient.”
With over 1,000 theatres and over 11,000 screens, AMC Theatres became the largest movie theatre chain in the world after it acquired Odeon Cinemas, UCI Cinemas and Carmike Cinemas in 2016.
