AMC Theatres is in grave danger of running out of cash by the end of the year or beginning of 2021 if people do not return to the movie theaters in greater numbers, the company revealed in public filings on Tuesday, as reported by Variety. The cinema chain cited attendance had dropped 85% in 494 of its 598 U.S. locations that have opened amid the coronavirus pandemic, while locations in major cities like Los Angeles and New York City remain closed as part of local COVID-19 safety measures.
Those states that have reopened have generally limited attendance due to social distancing measures. Meanwhile, the movies coming to theaters haven't drawn out the crowds execs would have hoped as larger blockbusters like Mulan and No Time to Die are either moved to streaming platforms or pushed back, as large movie premieres have been deemed unsafe at this time.
"Given the reduced movie slate for the fourth quarter, in the absence of significant increases in attendance from current levels or incremental sources of liquidity, at the existing cash burn rate, the Company anticipates that existing cash resources would be largely depleted by the end of 2020 or early 2021," AMC noted in its report, according to Variety. "Thereafter, to meet its obligations as they become due, the Company will require additional sources of liquidity or increases in attendance levels. The required amounts of additional liquidity are expected to be material."
AMC's report was issued on the heels of S&P Global's prediction that the company would run out of liquidity within the next six months, reducing AMC's credit rating. AMC is currently exploring several financial options, including possibly adding more debt or exploring equity financing; renegotiating lease payments with landlords; selling theaters or other assets; and exploring joint-venture opportunities. It will be difficult as the state of the global pandemic changes quickly, the company added, to estimate how much money it will expend or bring in during the coming days.
"There can be no assurance that the assumptions used to estimate our liquidity requirements and future cash burn will be correct, or that we will be able to achieve more normalized levels of attendance described above, which are materially higher than our current attendance levels, and our ability to be predictive is uncertain due to the unknown magnitude and duration of the COVID-19 pandemic," AMC said.