AMC Theaters says bankruptcy is “out of order” at this time

Ever since the COVID-19 pandemic forced AMC Theaters to shut down operations in March, Hollywood and Wall Street have speculated that Chapter 11 bankruptcy is imminent for the world’s largest theater operator.

For now, the beleaguered company can breathe, its CEO said.

AMC Chief Executive Adam Aron said in a statement Monday that “any discussion of AMC’s impending bankruptcy is completely irrelevant” after the company revealed it had raised $917 million in fresh capital since December. to sustain itself during the coronavirus crisis.

The company said it raised $506 million in equity by issuing 164.7 million new common shares and also signed letters of commitment for $411 million in debt by refinancing a European revolving credit facility.

The new funds, raised through a combination of debt and equity, would extend its financial trail “through 2021”, the company said. AMC previously warned investors that bankruptcy was a possibility if the company failed to replenish its cash reserves by selling shares. AMC, which was acquired by Chinese group Dalian Wanda in 2012, raised more than $1 billion from April to November.

“Obviously, this is a great day for AMC,” Aron said. “We are very optimistic about the future of cinema once the pandemic is somewhat behind us and once new movie titles are released again, but we have been spending money waiting for that new day. radiant arrives. We now have the money to survive.

Shares of AMC, which languished during the public health disaster, jumped 26% to $4.42.

The financial lifeline comes as the picture for the immediate future continues to darken for cinemas as studios hold back their films until patrons are vaccinated and ready to return to the multiplex. America’s No. 1 movie (“The Marksman” by Liam Neeson of Open Road) has grossed just $2 million domestically, and revenue so far in 2021 is down 93% from compared to the previous year, according to Comscore.

Last week, Metro-Goldwyn-Mayer Studios postponed its $250 million James Bond film “No Time to Die” from its April release date to October. This led to other studios delaying their films, including Walt Disney Co.’s “The King’s Man,” Sony Pictures’ “Cinderella,” and Paramount Pictures’ “A Quiet Place Part II.”

Warner Bros. from AT&T rocked the industry last year with its decision to release its 2021 films simultaneously in theaters and on the HBO Max streaming service. “Wonder Woman 1984” left HBO Max on Sunday and is now in theaters only after hitting theaters and the Christmas Day streamer.

Only 35% of American cinemas are open.

AMC is expected to emerge from the pandemic with heavy debt even after taking steps to strengthen its finances. Over the summer, the company restructured its balance sheet to clear more than $500 million in debt and negotiated with landlords over its rent payments throughout the crisis.

Aron said he expects the company to complete “another sophisticated debt swap” in 2021.

“I’m much less focused on our debt and more focused on our cash position,” Aron said. “We have proven that we are good financial engineers. The problem for us was to have the necessary liquidity to survive this dark winter impacted by the coronavirus.

Helen D. Jessen