Shares of AMC Entertainment, the world’s largest movie theater chain with more than 1,000 locations, are tanking on Tuesday after the firm disclosed it’s raising cash—again—to avoid further restructuring.
In a regulatory filing made public Tuesday, AMC said it has enlisted Citigroup and Goldman Sachs to help it sell 15 million Class A shares in an offering valued at approximately $45 million, based on Tuesday prices.
AMC shares are down 13% on Tuesday, trading at around $3.08 as of 11 a.m. EDT.
The firm estimates that on September 30 it had $417.9 million in cash and cash equivalents—an amount that “would be largely depleted” by the end of 2020 or early 2021 without any additional sources of liquidity, AMC said.
The struggling movie theater chain also released dismal guidance on Tuesday, projecting third-quarter revenue of $119.5 million, lower than the $155 million analysts were expecting and down more than 90% from $1.3 billion in third-quarter revenue last year.
Last Tuesday, AMC disclosed in a regulatory filing that it resumed operations at 494 of its 598 U.S. theaters with limited seating capacities of between 20% and 40%.
Since resuming U.S. operations in August, AMC served more than 2.2 million customers through October 9, representing a same-theater attendance decline of roughly 85% compared to the same period a year ago.
Movie theater chains in the United States have been reeling since March, when states began to force the closure of nonessential businesses in an effort to curb the spread of coronavirus. Both AMC and Regal began reopening U.S. locations in August, but sustained closures in states like New York have kept the movie theater industry scrambling for cash, and now AMC’s noting only two possibilities that can keep its business afloat: significant increases in attendance (which is highly unlikely) or other liquidity injections—most likely from additional debt and equity financing, but also through potential asset sales and further renegotiations of lease terms. But even then, the firm says there’s “significant risk” it won’t be able to tap more cash. Third-quarter earnings are due out November 3. AMC shares are down 57% this year.
“Substantial doubt exists about the company’s ability to continue as a going concern for a reasonable period of time,” AMC said in a Tuesday filing. “In the event the company determines that additional sources of liquidity will not be available to it or will not allow it to meet its obligations as they become due, it would likely seek an in-court or out-of-court restructuring of its liabilities, and in the event of a future liquidation or bankruptcy proceeding, [shareholders] would likely suffer a total loss of their investment.”
$5.5 billion. That’s the “substantial” amount of debt AMC said it’s saddled with, as of the firm’s latest debt restructuring in late July.
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