AMC Shares Soar on Private Offering and Liquidity Optimism

AMC says it can withstand suspension of operations until a partial reopening ahead of Thanksgiving. The theater operator's shares jumped on the report.
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AMC Entertainment Holdings  (AMC) - Get Report shares surged Friday after the movie theater company said it had enough liquidity to withstand suspension of operations due to the coronavirus pandemic until a partial reopening ahead of Thanksgiving.

In addition, the  Leawood, Kan., company said it had commenced a private offering of $500 million of first-lien notes due 2025. 

AMC, which shuttered its theaters in mid-March, said in a regulatory filing that said it was generating effectively no revenue as all its theaters have suspended operations through the end of June in response to the pandemic.

"Due to significant actions taken by the company, we believe our current cash balance is sufficient to withstand a global suspension of operations until a partial reopening in July," the company said. 

"After giving effect to the proposed notes offering, we believe the company will have sufficient liquidity to withstand a global suspension of operations until a partial reopening ahead of Thanksgiving." 

AMC said it had taken several steps to preserve cash, including full or partial furloughs and salary reductions. It is also working with landlords, vendors, and other business partners to manage costs. 

The company does not expect to continue dividend payment or make any share repurchases this year.

"We believe, but cannot guarantee, that the exhibition industry will ultimately rebound and benefit from pent-up social demand for out-of-home entertainment, as government restrictions are lifted and home sheltering subsides," AMC said.

AMC also said, however, that "the ultimate significance of the pandemic, including the extent of the adverse impact on our financial and operational results, will be dictated by the currently unknowable duration and the effect on the overall economy and of responsive governmental regulations, including shelter-in-place orders of the pandemic and mandated business closures. "

Last week, analysts at Loop Capital raised the possibility that the theater chain could file under the bankruptcy laws.

At last check AMC shares were trading up 35% at $3.30.

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