Theater chains are doing whatever they can to weather the pandemic, and the most recent development comes from AMC Theaters, who revealed today that it has completed a debut offering to raise $100 million in funds from investment firm Mudrick Capital Management LP (via THR). In the regulatory filing it’s stated that purchased senior notes will be exchanged for common stock to help balance things out as the pandemic continues and the company has to keep burning through cash, and as part of the filing AMC credited Warner Bros. most recent move to HBO Max as part of the reason.
“These challenges have been exacerbated by the announcement by Warner Bros. that its entire studio film slate for 2021 will move to simultaneous release, which may result in other studios adopting a similar strategy,” AMC said in the filing.
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In the filing, AMC said it needs about $750 million to keep its theaters open, and also said that its current cash resources would have been depleted by early next year.
“In the absence of additional liquidity, the company anticipates that existing cash resources will be depleted during January 2021,” AMC said in the filing.
AT&T CEO John Stankey recently addressed the decision to simultaneously release on HBO Max, saying that the move is about getting product out to consumers at a time when many will still be reluctant to return to theaters. He did admit that there is some noise about the decision, but that this brings more value to HBO Max and helps to keep flow to theaters going since movies will also release there.
Stankey also said that the longer plan is “dictated by what consumers choose to do”, and added that if people start returning to theaters they will “adjust and work the model differently.” He then added that “Our approach is to lean in to where things are going (and not where they’ve been).”
AMC has said it’s experienced a year over year decline of 92% in stateside theater attendance for the three months ending on November 30th, and while theaters are hoping that attendance changes soon, it might not for at least a few more months. Hopefully this latest cash infusion will help AMC weather the storm.
