AMC Entertainment Raises $100M But Warns Cash May Be Gone In January, Slams Warner Bros.

AMC Metreon San Francisco

Struggling AMC Entertainment said it risks running out funds in January.

In its latest warning cry, it said it needs $750 million “to remain viable” through 2021. Even if it raises that, it still risks bankruptcy next year if moviegoing doesn’t pick up — and Warner Bros. may have made that harder to accomplish.

In an SEC filing, the nation’s biggest exhibitor also announced cash injection of $100 million in a debt sale to Mudrick Capital Management, at an annual interest rate of 15%. Mudrick will exchange its notes for about 13.7 million AMC shares. The chain has sold stock recently as well. It said it’s negotiating with landlords, creditors and potential joint venture partners on ways to make it through the pandemic and is in discussions regarding potential financing alternatives for its international businesses.

As of Nov. 30, AMC had more than $400 million of rent obligations deferred to 2021.

It’s a race. The company had $320 million in cash and cash equivalents as of Nov. 30, down from $418 million at the end of September. Cash burn — the amount it needs to spend each month — was about $125 million during October and November.

“A significant spike in coronavirus cases, together with delays of major movie releases or the direct or simultaneous release of movie titles to the home video or streaming markets in lieu of theatre exhibition, have led to theatre closures, prevented the opening of theatres in major markets and have had, and are expected to continue to have in the future, a material adverse impact on theatre attendance levels and our business. These challenges have been exacerbated by the announcement by Warner Bros. that its entire studio film slate for 2021 will move to simultaneous release, which may result in other studios adopting a similar strategy,” AMC said.

Warner Bros. announced last week  announcement that its entire 2021 film slate will debut on HBO Max day-and-date with cinemas domestically.

AMC estimate that if its attendance levels do not significantly improve during the first half of 2021 (to achieve an overall level of approximately 20% of pre-COVID 2019 attendance levels) and again during the second half of 2021 (to achieve an overall level of approximately 85% of pre-COVID 2019 attendance levels), the believe the liquidity shortfall would be greater than the estimated $750 million minimum shortfall noted above, “which if not addressed would prevent us from continuing as a going concern.”

AMC said that as of Nov. 30, it was operating 404 of its 594 U.S. theatres, with limited capacity and hours. Theatres were closed in some major markets like New York City and California. In the quarter from October 1 to November 30, attendance declined 92% from the same period a year ago.

The company is still hoping that the promise of an effective vaccine against the coronavirus, which is expected to become widely available next year, together with the expected release next year of major movie titles that have so far been delayed, will “have a material positive impact.”

But, it said, “We cannot predict what supply of movie titles will be available for theatrical exhibition once moviegoers are prepared to return in large numbers. Nor can we know with certainty the impact of the Warner Bros. announcement or any similar announcements regarding the release of movie titles concurrently to the home video or streaming markets, as those arrangements will be subject to negotiations that have not yet taken place.”

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