The same day the National Association of Theater Owners (NATO) warned Congress upwards of 70-percent of its member theaters could close up shop by the end of the year, AMC Theatres posted a filing with the SEC suggesting bankruptcy is a legitimate possibility by the end of the year. In the same filing, AMC revealed it intends to sell upwards of 15 million shares of its own stock in an effort to shore up extra liquidity to keep theaters open wherever allowed.
“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,” the country's largest theater chain said in the filing.
The news of a possible bankruptcy also comes on the heels of the company announcing earlier this month it would be cash broke by the end of the year, or early 2021 at the latest.
“Given the reduced movie slate for the fourth quarter, in the absence of significant increases in attendance from current levels or incremental sources of liquidity, at the existing cash burn rate, the Company anticipates that existing cash resources would be largely depleted by the end of 2020 or early 2021,” the company said in a statement. “Thereafter, to meet its obligations as they become due, the Company will require additional sources of liquidity or increases in attendance levels. The required amounts of additional liquidity are expected to be material.”
It added, “There can be no assurance that the assumptions used to estimate our liquidity requirements and future cash burn will be correct, or that we will be able to achieve more normalized levels of attendance described above, which are materially higher than our current attendance levels, and our ability to be predictive is uncertain due to the unknown magnitude and duration of the COVID-19 pandemic."
NATO's statement on Tuesday once again brought light to the dire situation most theaters in the country are facing as it asked Congress for an injection of billions to keep the industry afloat through the end of the pandemic.0comments
“Without such help, 70% of the theaters in the country could file for bankruptcy or close permanently by the end of the year. More than 70,000 jobs could be lost permanently," the group's statement read. "While many small business theater operators were able to access Paycheck Protection Program loans, given the duration of the pandemic, those funds have been exhausted and theater revenues are still close to nothing. The current rules of the program remain challenging for theaters that are shuttered or doing little business.”
There's currently the Save Our Stages Act floating about Capitol Hill, though Congress has yet to vote on the package.