The writing has been on the while for a while now, but recent public filings have cinema chain AMC finally admitting it publicly: the company is running on empty. Despite being the world’s largest exhibitor, AMC has stated that if moviegoers don’t return to theaters in the near future, the company might not survive the pandemic. The situation is so dire that AMC might run out of cash by the end or year, or early 2021.
Of course the immediate reasons for this are due to the Coronavirus pandemic, with the company reporting that at the 500 or so of its locations that are even allowed to be open, attendance is down 85%. This is on top of the fact that theaters in major markets like New York and Los Angeles are still closed due to stricter quarantine rules enforced in major cities, which in turn has made studios hold back any major blockbusters that might drive traffic to theaters. None of this is helped by the fact that AMC has been suffering financial hardship for some time, including recent restructuring of its debt.
The official statement goes as follows: “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.” The company stated that in order to fix this issue attendance needs to go up, or they will require “additional sources of liquidity.” Basically, they need money, and if people don’t start paying to see movies, they’re going to need to do something else to stay afloat.
Unfortunately, AMC is facing fewer and fewer options for how they’re going to make money back on its already existing property. They’ve already recently restructured their finances in order to keep themselves afloat. Options include taking on more debt, renegotiating their leases with landlords, or perhaps just selling some of their assets including theaters and equipment. Nothing is for sure yet, however, as AMC admits: “our ability to be predictive is uncertain due to the unknown magnitude and duration of the COVID-19 pandemic.”
Source: Variety
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