AMC warns it is running out of cash
America’s largest movie theater chain AMC has warned shareholders it could run out of cash by the start of 2021.
Sarah Whitten reported the news for CNBC:
AMC, the largest cinema chain in the U.S., warned investors on Tuesday is in danger of running out of cash by early 2021.
Shares of the company tanked by 7.8% in early trading Tuesday. AMC’s stock, which has a market value of $446 million, has plunged 44% this year.
In a public filing, the movie exhibitor said a bare movie slate and lackluster attendance has left its business hemorrhaging cash with little hope of recouping losses in the near future.
CNN’s Frank Pallotta wrote:
The company said it has two ways out of its cash crisis: Either more customers need to buy tickets, or it will have to find new ways to borrow money.
Getting butts in seats has proven a major challenge. As of October 9, AMC reopened 494 of its nearly 600 US theaters at a seating capacity between 20% and 40%. But AMC (AMC) isn’t filling the limited seats it’s offering: Since the US theatrical market reopened in the late summer, it has served more than 2.2 million guests. That represents an attendance decline of 85% compared to last year.
Jill Goldsmith from Deadline quoted an analyst as saying:
“I really don’t know how they don’t go bankrupt,” said one Wall Street analyst. “They should be out of cash by the end of January. And most companies don’t file when they are minus ten million in cash. The attorneys have to be paid.”
AMC is in tight corner, as it acknowledged. It has about $5 billion in debt and high debt means high interest expense. AMC, which is majority owned by Chinese conglomerate Wanda, racked it up pre-pandemic with a string of acquisitions, dividend payments and upgrades to its theaters.