The COVID-19 pandemic continues to pose a significant problem to the United States. Since Congress has been unable to agree on another stimulus package, which could provide much-needed aid to the economy, many businesses have been feeling the health crisis’s effects. According to CNBC, one of the companies hit hard by this pandemic is AMC Theatres. On Tuesday, the publication reported that AMC has warned that bankruptcy is on the table as they are running low on funds.
The company has reportedly agreed to sell as many as 15 million stock shares amidst their financial troubles. However, that stock could become worthless if the theater chain files for bankruptcy, which they have cautioned could happen soon. AMC Theatres reportedly told investors on Tuesday that they are running low on funds. They said that as a result of their diminishing cash flow, they may have to file for Chapter 11 bankruptcy. If they do file for bankruptcy, it would likely allow AMC Theatres to stay in business while they rework their debts and figure out new lanes of liquidity for the company.
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As CNBC noted, theater chains across the country (and around the world) have been hit hard amidst the ongoing coronavirus pandemic, as many Americans are not going to movie theaters at this time. In particular, AMC Theatres was already in a vulnerable position as it had already amassed more than $4.75 billion in debt before the health crisis began. Currently, the theater chain has around 1,000 theaters and more than 11,000 screens in the world. In an SEC filing, the company wrote, “We will require significant amounts of additional liquidity and there is substantial doubt about our ability to continue as a going concern for a reasonable period of time; holders of our Class A common stock could suffer a total loss of their investment.”
Back in March, AMC announced that they would be shutting down their locations in the United States amidst the coronavirus pandemic. Those locations didn’t re-open until months later, in August, with renewed safety guidelines in place. Even though many locations were able to open, AMC Theatres has expressed doubts that they will successfully overcome the struggles that they have encountered during the pandemic. Based on this latest CNBC report, it sounds as though the theater chain could be taking serious action soon as it concerns their financial status.
