AMC Entertainment plans to sell 20 million of its Class A shares, netting $47.7 million, as it contends with ongoing shutdowns of many of its movie theaters and a withdrawal of studio films from the 2020 release calendar.
COVID-19 hampered the release of Tenet in August and aside from less-expensive, targeted titles, wide releases have shifted to either later release dates or streaming debuts.
The company disclosed the move in an SEC filing Monday. Among the risk factors for investors listed by AMC in the filing is “our ability to obtain additional liquidity and our ability to continue as a going concern.”
Three weeks ago, the No. 1 exhibitor disclosed that its cash supply could run out by the end of the year, sparking a new round of anxiety that it could end up in bankruptcy. While key markets like San Francisco have come back online, New York — where AMC is the dominant commercial player — remains off-limits, with no sense of when state health officials may change their tune. Regions of New York outside of the city last month reopened theaters. Los Angeles also is unplugged for the time being.
The fate of major exhibition chains (and of theatrical moviegoing itself) has been a major storyline in the entertainment business during the coronavirus pandemic. It is not yet clear who might be a candidate to come to theaters’ rescue. Movie studios have more flexibility to potentially invest in theaters now that the 1948 Paramount decree has been rolled back, but executives have poured cold water on that scenario recently.
In a similar vein, tech companies like Netflix or Amazon would seem to have no constraints financially but have countered speculation that they could swoop in and buy theaters. Netflix reached deals to operate the Egyptian Theatre in LA in a partnership with the American Cinematheque and also to run New York’s Paris Theatre but execs have characterized both moves as one-off opportunities.
Private equity firms are one likely source of equity for theaters. Silver Lake already owns 31% of AMC and increased its position with a $600 million infusion in 2018.