AMC CEO Adam Aron said during the company's third-quarter earnings call on Monday that he is currently in talks with more than a dozen strategic investors for an equity investment in the movie theatre chain.
The talks come as the company looks to raise enough capital to stay afloat until at least next summer, when they expect to see a COVID-19 vaccine and can release an estimated backlog of roughly 44 blockbuster films that were previously delayed by the pandemic.
Aron noted that AMC is also talking with its existing lenders to "gauge their interest in further boasting, bolstering our liquidity" as they did the past summer and has restarted a dialogue with its landlords to help abate or defer rent payments. As of the end of the third quarter, AMC has deferred rent of approximately $325 million with average repayment terms of 24 months.
“It all really comes down to one thing: We believe that we will need to raise more capital to lengthen the runway into next summer,” Aron said. "The simple question becomes, will we raise the needed capital or not?”
As of September 30th, 2020, AMC had $418 million in cash, plus $11 million in restricted cash. The company had a total cash burn of $324 million for the quarter, primarily due to costs associated with its theater reopenings,. Aron said that the company has sufficient liquidity to last through the end of the year.
AMC warned investors last month that a potential bankruptcy is on the table as the spread of the virus continues to keep many of its movie theaters across the globe shuttered.
As of the end of October 2020, AMC was operating approximately 539 of its 600 domestic locations, and approximately 261 of its 358 international locations. However, Aron said the open locations in the United States are hovering at attendance between 10% and 20%, well below the 25 percent in attendance needed to generate cash.
Aron compared the movie theater industry's fight against the pandemic to the United Kingdom’s fight for survival during World War II.
"We shall fight on the seas and oceans, we shall fight with growing confidence and growing strength in the air, we shall defend our Island, whatever the cost may be," Aron said, quoting former British prime minister Winston Churchill's famous speech. "We shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets. We shall fight in the hills."
Since March, the company has raised about $900 million from new debt and equity secured more than $1 billion of concessions from creditors and landlords and raised more than $80 million from asset sales. In addition, the company said earlier Monday that it’s seeking to sell an additional $48 million worth of stock.
“It’s too early to know if these efforts will bear fruit or if so or when so by how much," Aron added. "But our days and nights are busy ones at AMC and we absolutely are not sitting on our hands bemoaning the lousy hand, the cards, that the coronavirus has dealt us."
In addition to its larger investment efforts to raise capital, AMC has struck an agreement with Universal Studios for six theatrical movie releases where it will partner with the studio for in-home viewing. According to the agreement, the films will have a shortened theatrical window of about 17 days before they would be made available for at-home viewing. AMC would then receive a portion of the sales revenue for copies of films sold by Universal through video on demand.
"AMC, as we proved with the Universal deal, is not stuck back in 1955. We are willing to consider alternate models," Aron said.“We understand the world of streaming is upon us. We believe it optimizes our profitability and the studio’s profitability if they can have a combo of theatrical releases and streaming.”
AMC posted a net loss $905.8 million, or $8.41 a share, compared to $54.8 million a year ago. The company reported revenue of $119.5 million, plunging from almost $1.32 billion a year ago.
Shares of AMC plummeted more than 8% in Monday's trading session. The announcement of talks with investors slightly boosted the stock in after-hours trading, however, with shares up about 3% Monday evening.