COVID-19 put AMC Theaters’ fate into question. Now, the theater chain has found another battle strategy for staying alive. AMC Theaters is now preparing to sell off 20 million Class A shares. AMC would net $47.7 million if all stocks sell.
The struggling company made the decision public in their SEC filing. The company hopes the filing improves “our ability to obtain additional liquidity and our ability to continue as a going concern.” The move comes shortly after we learned America’s largest theater chain may lose all of its cash supply by the end of 2020 or the end of January, 2021. Talks of bankruptcy have persisted throughout the year.
AMC Theaters runs 600 theaters in the United States. Many of them have reopened over the past few months, except in New York City and Los Angeles. Those are two of the largest markets for cinema chains. Theaters in the two East Coast and West Coast cities, however, have remained closed throughout the pandemic. Governors in New York City and Los Angeles haven’t hinted at reopening the theaters, as much as theater chains have been arguing to reopen.
Since New York City and Los Angeles’ theaters remained closed and the spread of the coronavirus, studios have continued to delay all of their major releases to 2021. Few major films are coming out the rest of the year, with the possible exception of Wonder Woman 1984. Warner Bros. executives still hope to release the sequel on Christmas day, but after the domestic box-office failure of Tenet, people are doubtful. Warner Bros. gambled on releasing that film during the summer, and the gamble didn’t payoff.
Two weeks ago, analysts were expecting AMC Theaters to run out of funds by the end of January and declare bankruptcy. Presently, the company is $5 billion in debt. Already AMC has been selling off stocks to stay afloat. Previously, the company sold $40 million worth of stock. While that was promising news, the company is losing around $115 million a month. At the end of summer, the company had $500 million in funds left. A rep for AMC Theaters recently explained the company is considering asset sales, joint ventures, and more stock or bond sales. Now, AMC is again going with stock sales.
AMC Theaters has had a terrible year. Months ago, to make matters worse, the company went head-to-head with Universal Pictures. The studio released major titles on VOD to great results and expressed interest in distributing more movies to streaming. AMC proclaimed to never show a Universal title again in their theaters. It didn’t take long for AMC and Universal to settle the fight and come to a surprising agreement, in which AMC would get a cut of Universal’s future VOD sales.
Back in April, Chapter 11 became a possibility for AMC Theaters. Reps for the company expressed hope, saying there’d be a summer at the movies for general audiences, but there wasn’t. “The summer has always been one of the biggest movie seasons of the year, the summer and Christmas,” CEO Adam Aaron said in the spring. “I would love to think that America will be enjoying summer movie season again.” Since then, news, the spread of the coronavirus, and the chances of reopening in major moviegoing markets have only worsened for AMC Theaters.
Similar to AMC Theaters, Regal Theaters is endangered. 536 of their locations are closed down in the United States. Cineworld, which owns Regal Theaters, didn’t deny Regal Cinemas may be closing for good. Over 40,000 Regal employees in the United States were facing furloughs. As for AMC Theaters, the company has faced major furloughs, even among corporate staff. Back in March, all 600 of them were furloughed.