AMC Entertainment, the largest movie theater chain in the world, will “run out of liquidity” in six months, according to debt ratings agency S&P Global Ratings, which downgraded AMC’s credit rating from CCC+ to CCC- and slapped it with a negative outlook, according to The Hollywood Reporter.
“Given our expectations for a high rate of cash burn, we believe the company will run out of liquidity within the next six months unless it is able to raise additional capital, which we view as unlikely, or attendance levels materially improve,” said the agency.
“The negative outlook reflects our view that a default, distressed exchange, or redemption appears to be inevitable within six months, absent unanticipated significantly favorable changes in the issuer’s circumstances.”
Box office sales have cratered in the wake of the COVID-19 pandemic, despite 70% of US movie theaters estimated to have re-opened with social-distance seating as of Labor Day.
After major theater re-openings on Labor Day pulled in a collective $28.4 million for 25 film releases, according to IMDB’s Box Office Mojo.com, the next two following weekends saw declines: $12.6 million for 24 releases (September 11-13) and $11.3 million for 28 releases (September 18-20). –MediaDailyNews
In July, AMC completed a debt restructuring with bondholders which saw $200 million in fresh cash, as well as the purchase of $100 million in new senior notes by the Silver Lake Group. The chain also raised $77 million by selling nine theaters in Europe’s Baltic region.
According to S&P Global, AMC “continues to struggle operationally and financially because U.S. attendance remains weak after reopening, additional major theatrical releases are delayed and its cash burn might accelerate now that its theaters are open,” and that continued reduced capacity combined with customers who are increasingly embracing streaming platforms, is likely to persist into next year.
Most exhibition companies — or 93 percent — weathered losses of 75 percent in the second quarter of 2020 after moviegoing came to an unprecedented stop in mid-March. While more than half of theaters are now reopened, Hollywood continues to delay its major fall releases out of concern that many moviegoers aren’t yet ready to return. –The Hollywood Reporter
On Wednesday, the National Association of Theatre Owners, the Directors Guild of America and the Motion Picture Association were joined by dozens of influential filmmakers to beg Congress for money, warning that many cinemas may not survive.