AMC Entertainment (AMC) - Get Report shares slumped lower Friday after the struggling movie theatre company warned that it needed at least $750 billion in additional funding in order to avoid bankruptcy next year.
Around 70% of AMC's 594 U.S. theaters are running with limited capacity, owing to the coronavirus pandemic, AMC said in a Securities and Exchange Commission filing, and the group only has enough cash to continue operating through to the end of January. It had $320 million in cash as of November 30, down from $417.9 million on September 30.
AMC said it is exploring financing alternatives, including an at-the-market sale of 178 million shares, but needs around $750 million of additional liquidity in order to remain viable through the whole of 2021, noting that, given the uncertainty about its ability to raise additional liquidity "substantial doubt exists about the company's ability to exist as a going concern".
"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, are expected to have a material positive impact on our industry and have generated optimism that movie theatre attendance levels ultimately will significantly rebound from current levels," AMC said in the SEC filling.
"In the meantime, however, 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," the statement added.
AMC shares were marked 2% lower in early trading Friday to change hands at $4.01 each, extending their year-to-date decline to around 40%.
Movie theatres around the world have struggled through the global pandemic, which has infected nearly 70 million people, as well as potentially permanent shifts in entertainment consumption accelerated by online streaming services and stay-at-home habits.
Last night, in fact, Walt Disney Co. (DIS) - Get Report said around 80% of its new content would be released online, and not in theatres, as it moves to boost its online subscriber base to 350 million over the next three years. That decision followed a move by AT&T's (T) - Get Report Warner Brothers last week to launch all of its 2021 movie releases on HBO Max at the same time they're available in cinemas.