AMC nets $917M in financing to ward off bankruptcy

World’s largest movie theater chain buys time with debt and equity deals as it continues to burn cash during the Covid-19 pandemic

Movie theater giant AMC Entertainment Holdings Inc. signed deals for $917 million in financing to survive the Covid-19 pandemic for months longer without resorting to bankruptcy, the company said Monday.

AMC, the world's largest movie theater chain, said it had executed a commitment letter for $411 million in debt financing through increasing the size of and refinancing a European credit facility while raising $506 million in equity since mid-December.

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"This means that any talk of an imminent bankruptcy for AMC is completely off the table," said Chief Executive Adam Aron. The company had warned about its risk of bankruptcy since late last year.

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With the deals, AMC said its financial runway has now been extended deep into 2021 and that while an increase in cinema attendance seems likely, the future course of the coronavirus means the company's cash needs remain uncertain.

"Investors are cautioned accordingly," AMC said.

AMC Empire 25 theatre in Times Square in New York on May 13, 2020. (Photo by Evan Agostini/Invision/AP, File)

The company also said it presumed it would continue to make progress in negotiations with theater landlords over lease payments.

Investors have been willing to keep AMC afloat even as it burned cash and theaters stayed largely dark as infections surged late last year. The Wall Street Journal reported earlier this month that AMC was in talks with its creditors and outside investors for a financing deal backed by European assets.

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The pandemic has hit AMC hard as restrictions on indoor gathering forced the company to temporarily close most of its more than 1,000 theaters world-wide. AMC and its peers also face a challenge from major Hollywood studios that have either delayed releasing films or released them straight to streaming services during the pandemic, leaving cinemas with little content to show those viewers willing and able to brave a trip to the big screen. Warner Bros. said earlier this month that it would release its entire 2021 slate of films simultaneously in theaters and on its HBO Max streaming service, a drastic step in eliminating the exclusivity that theater chains have enjoyed for decades.

But the Covid-19 vaccination rollout has fueled hopes that cinemas can rebound once enough people have been given shots, government restrictions ease, and moviegoers feel comfortable in theaters again, according to investors and analysts who track the industry.

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Mr. Aron said AMC needs "much of the general public in the U.S. and abroad to be vaccinated" for the company to succeed.

The company has been selling stock into the market since last month, hoping to take advantage of frothy equity markets while warning that failing to generate sufficient liquidity could force a chapter 11 filing.