AMC Entertainment (AMC) - Get Report shares were marked to open more than 25% lower Wednesday, after the U.S's second-largest movie theater chain said it expected a steeper-than-expected loss in the second quarter.
Shares are opened at $15.80 on Wednesday, after closing at $20.80 on Tuesday, extending a three month loss of 30% and a year-to-date decline of more than 60%.
AMC said late Tuesday that it expects total revenue for the three months to the end of June to be around $1.2 billion and a net loss of between $178.5 million and $174.5 million, or $1.36 to $1.34 per diluted share. It reports its second quarter earnings on Aug. 7.
The loss is attributed to a $202.6 million pre-tax impairment charge related to AMC's National CineMedia, LLC investment, because the market value of its investment in NCM declined significantly below its carrying value. The expected results are also reflect a 4.4% fall in U.S. box office.
The loss comes at a tricky time for AMC and its Chinese parent company Dalian Wanda, which is reportedly being investigated by Chinese regulators for the funding of its foreign acquisitions. It is believed that the State Administration of Foreign Exchange recently began reviewing loan guarantees for highly acquisitive companies, including Dalian, Anbang Insurance Group Co, Fosun International Ltd and HNA Group Co.
AMC shares fell 10% on July 17, after it was reported by the Wall Street Journal that regulators had ordered the China's biggest banks to stop making loans to Dalian Wanda to finance foreign acquisitions.
AMC however denied the reports a day later, saying they had the financial power to support themselves. The company said that Wanda "has never been a source of acquisition funding for AMC." That includes its deals for Starplex Cinemas, Odeon & UCI Cinemas, Carmike Cinemas and Nordic Cinema Group Holding - all made since 2012 when Wanda bought AMC.
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