Just When We Thought AMC Was SOL

“In our industry, the gravity of our situation puts us all in almost a warlike position of resolve and determination,” Aron said before quoting the British prime minister’s famous World War II speech in which he declared, “We shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields.” — CEO Adam Aron

The world’s largest theater chain will receive an injection of cash from Mudrick Capital Management as it scrambles to tidy up its books and avoid bankruptcy. Mudrick, a New York firm that specializes in distressed debt investing, is purchasing $100 million of pay-in-kind bonds due in 2026, AMC [$AMC] responded in a securities filing on Friday.

Things are getting grim for the pandy slammed company, which has been up front about its need for capital to get through the current environment. Without more infusions, cash will run out in January, AMC said. In order to survive 2021, it will need $750 million of additional liquidity.

“Given the uncertainty regarding our ability to raise material amounts of additional liquidity and the uncertainty as to the time at which attendance levels normalize, substantial doubt exists about the Company’s ability to continue as a going concern for a reasonable period of time,” the filing said.

AMC has been raising cash through sales of stock, generating $152 million between October 1 and November 30.

Public health mandates have adminstered closures or occupancy restrictions on AMC and theater operators alike. What’s more, Hollywood studios have delayed major premieres or pivoted to streaming services, landing a knockout punch on the theater industry.

Attendance at AMC theaters is down 92% since October, even though it is operating at 404 of its 594 U.S. locations, the company revealed in the filing. Its two biggest markets—New York City and Los Angeles—remain closed. It still has to pay rent and cover other costs. AMC had $320 million of cash as of last month, down from $418 million in September, according to the filing. Its monthly cash burn in November and October was $125 million.

Mudrick was an existing debtholder. As part of the agreement, it will exchange $100 million of debt it already owns into 13.7 million common shares, the filing said. AMC said it’s continuing to look at stock sales of up to 178 million shares and possible joint-venture talks with investors as it prepares for $400 million in rent deferrals coming due next year.

Shares fell 3.4% on Friday and are down 45% this year compared with the S&P 500’s 12.8% gain.

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