AMC closed due to COVID-19

Of all the industries affected by the global pandemic, one of the hardest hit has been movie theaters. Now, a new report says that AMC could run out of money by the end of the year.

AMC shut down it’s business back in March at the start of the global pandemic. It has since re-opened but noted that attendance at the 494 of its 598 U.S. locations that it has opened in recent weeks is down approximately 85%.

This is due to a number of factors. One is the reduced customer capacity due to COVID restrictions. Another is that certain large states like California and New York have still not opened. The final is that movie companies refuse to release their movies until they know they will see the same revenue. Regal attempted to reopen a few weeks ago in September. They quickly shut their doors again citing a lack of big movies to attract enough customers.

In a new financial report, AMC said,

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. Thereafter, to meet its obligations as they become due, the Company will require additional sources of liquidity or increases in attendance levels. The required amounts of additional liquidity are expected to be material.

AMC’s Plans

Back in June Regal got a 250 million dollar liquidity/debt boost to keep from shutting down. Other theaters have done similar. Now it seems the extra influx of cash may be running out. AMC has already heavily leveraged and renegotiated its debt to try to be in better financial standings. They have said they are exploring several options to help avoid closure.

AMC’s options include accruing additional debt, renegotiating with leases with landlords, selling certain theaters and assets, and exploring joint venture options. It is looking more and more likely that we see the end of movie theaters in our lifetime.