Cinema Stocks Teeter; Wall Street Ponds AMC Entertainment Bankruptcy, For Real – Deadline


AMC Entertainment announced that Exhibition shares have outperformed on Tuesday. It may be announced by the end of the year.

As theaters are limited in markets in New York and Los Angeles without major audiences and a major shortage of new studio rentals, the heavily indebted AMC said in an SEC filing that there is enough cash to last until the end of the year and “Content” will be required. Additional capital to operate beyond that point. It does not appear that the given capital or that AMC could be forced to go bankrupt while reviving speculation on Wall Street.

“There is a significant risk that these potential sources of liquidity will not be realized or that they will be insufficient to generate the physical volume of additional liquidity that will be necessary as long as the company is able to achieve a more generalized level of operating revenue Neither, “said the AMC filing.

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“I really don’t know how they don’t go bankrupt,” a Wall Street analyst said. “They should be out of cash by the end of January. When they are one million in cash, most companies do not file. Lawyers have to pay. ”

At the close, AMC shares were down by 13%. Cinemark, Marcus and National CineMedia fell 8%, 7.2% and 9% respectively. In the after-hours trade, all came to a standstill.

AMC is in a tight corner, as acknowledged. It has a debt of about $ 5 billion and higher debt means higher interest expense. AMC, which has a majority stake in Chinese conglomerate Wanda, racked it up with pre-pandemic acquisitions, dividend payouts and upgrades to its theaters.

In contrast, Cinemark has stated that it has liquidity of about 17 months and AMC has less than half the debt. (One analyst attributed Cinemark’s stock dip to the fact that it is becoming increasingly difficult for short AMC stocks. Short selling occurs when investors borrow shares, sell them and then to lend Buy to buy back, which will cause the price to fall.) Investors can shorten Cinemark as the only way to have a mini exhibition.)

AMC noted in an SEC filing this morning that it had raised close to $ 40 million in a stock sale, which is good. But its cash burn is about $ 115 million a month and as of August 30 it was valued at about $ 500 million in funds. The company said that today it is looking at asset sales, joint ventures, minority investment sales and a new round of stock or bond sales. It recently sold off its Baltic cinemas and, a source said, negotiations were underway to split its Nordic cinema.

Industry sources believe that the first property on the block at the bankruptcy auction would be the AMC Classic, acquired in 2016 by the former Personnel Cinemas Theater.

Meanwhile, B Riley Riley Securities analyst Eric Wald said asset sales may be possible but this is a “buyers market” – so prices will be lower. “Given the impossible ability to meet any additional debt finance, we would expect continued dilution in the company’s equity under additional equity offerings and / or minority investments.”

AMC restructured its debt in July and gave it some runway but it can only last so long when film production does not begin properly.

Wold called New York and LA’s absence truly crippling. AMC has opened more than 80% of its US theaters, but the lack of new film content has led to a drop in 85% of same-theater attendance, he said in a note this morning. However, with only 17% of AMC domestic theaters remaining to be reopened (with some coming online soon in North Carolina and Washington), the “most productive theaters” in California and New York still have an uncertain reopening time . He said that 17% of those theaters are to reopen which is 23% of AMC’s 2019 domestic revenue. He is “not surprised to see the studio continuing the studio release calendar under these circumstances.”

“If things go on like this and there aren’t a lot of movies and they stay open they’ll be tense,” said Credit Suisse analyst Meghan Durkan. Debt restructuring “may hit the road down 12-18 months on some of the interest expense, but their cash rate is still higher than twice that of Cinemark.”

Regal’s parents Cineworld decided it was too expensive to stay open and said it was closing down almost all of its US and UK theaters again.

In a note on 5 October, after the news that MGM had transferred the next James Bond film No time to die From November 2021, Loop Capital analyst Alan Gold called it “a possible death knell for AMC”. Disney most recently announced that Pixar’s inner heart Will follow Mulan Direct to Disney +.

Goldcast estimates that the domestic box office fell 95% in the third quarter and 85% in the fourth quarter. It is looking at the domestic box office for $ 2.4 billion this year and $ 8.6 billion in 2021, down from $ 11.3 billion in 2019. He also expects the number of screens to be reduced to about 36,000 over the next two years, down from 41,000 currently.

Even before the epidemic, COVID and the theater crisis have focused on streaming. On Monday, Disney announced a rare restructuring of its content and distribution business units to maximize streaming capacity, followed by similar moves by AT&T’s WarnerMedia and Comcast’s NBCuniversal.

The opposite is that Regal’s closure will benefit cinemas that remain open. AMC CEO Adam Aron has said that a unique windowing deal with Universal will give it a handful of films as well as focus features. ‘ Cajilinaire, low play, And let him go And universal Croods: a new era.

Also, Aran has been good at finding fresh cash. AMC raised $ 500 million in an epidemic and other $ 200 million debt restructuring offers, which also reduced debt and interest expenses and excluded some repayment deadlines. Silver Lake, Partners invested $ 600 million in AMC in 2018 but it is not known whether the investment firm will bail them out.

Silver Lake was not immediately available to comment.

AMC declined to comment.

AMC leases 875 theaters (10.1k screens) and owns or partially owns 62 theaters (561 screens) worldwide. Stateside, AMC has a partial interest in seven theaters and 73 screens.

Bankruptcy is not new to the industry, and some pundits believe that the American screen count will not be undermined in the entertainment scene. Two decades ago, a handful of exhibitors went bankrupt and bought each other out of debt after borrowing all over. Between 1999 and 2001, the bankruptcy included Regal, Carmike, Loose Cineplex, United Artist, General Cinema, Edwards Theater, Mann Theater, Dickinson Theater and Silver Cinema.

B. Riley’s Wald hangs on AMC with a “neutral” rating, which he acknowledged “may be optimistic given our continued liquidity concerns.” But he said he also thinks that “major US markets should yet reopen the green light in the near term, both reacting to the company’s share price and ability to secure capital can be extremely positive.” ”

Anthony D’Alandro contributed to this report

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