AMC Theatres reportedly has “substantial doubt” that it can reopen from the pandemic shutdown. According to CNBC, the movie theater chain initially expressed hope of doing a partial reopen before Thanksgiving, but their plans could be changing. Per a filing with the Securities and Exchange Commission AMC expressed concerns about the ability to generate revenue, the timeline of reopening its theaters, and liquidity.
The filing reveals that AMC’s revenue fell to $941.5 million in its first quarter this year. In the same quarter last year, the world’s largest movie theater chain garnered $1.2 billion. This is close to a 22% drop, and the second quarter is expected to be even worse for the chain. “We are generating effectively no revenue,” the company stated in its filing. As of April 30, AMC reportedly stated that it had a cash balance of $718.3 million. While the company believes that it has enough cash to reopen this summer, leadership appears to be worried that its liquidity becomes very uncertain after that.
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The company addressed its concerns, saying, “We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because we have never previously experienced a complete cessation of our operations, and as a consequence, our ability to be predictive is uncertain. It added that if AMC theaters “do not recommence operations” inside of the timeline that was previously estimated, the company “will require additional capital.” AMC also stated that it “may also require additional financing,” then offered an example if the possibility “operations do not generate the expected revenues or a recurrence of COVID-19 were to cause another suspension of operations,” there would be “substantial doubt” about its “ability to continue as a going concern for a reasonable period of time.”
Back in March, it was revealed that AMC was closing down all 630 of its United States locations for six to 12 weeks. At the time, the chain estimated that — at the very latest — it could reopen all locations on June 6. AMC boss Adam Aron released a statement on the closings, saying, “We are ever so disappointed for our moviegoing guests and for our employee teams that the new CDC guidelines that Americans should not gather in groups larger than 10 people make it impossible to open our theatres.” Days later, it was reported that the chain had furloughed 600 employees from its home office in Leawood, Kansas.
