People walk outside the newly approached AMC 34th Street 14 cinema as the city continues to reopen Phase 4 after restrictions imposed to slow the spread of the coronavirus on September 4, 2020 in New York City.
Noam Galai | Getty Images
The AMC theater chain hopes to raise $ 125 million in new capital to avoid bankruptcy by selling 50 million shares in a new round of financing, the company said on Wednesday.
The world’s largest cinema chain raised $ 104 million earlier this month, after selling about 38 million of the 200 million in available shares. The company is trying to strengthen its balance sheet to resist the prolonged economic slowdown as the coronavirus pandemic drags on to the second year and threatens the viability of the film industry.
Earlier this month, AMC received a $ 100 million investment from Mudrick Capital Management, but the cash-strapped cinema chain still needed at least $ 750 million in additional liquidity to finance cash needs by 2021.
The company reiterated in several requests to the SEC that bankruptcy is a possibility if it cannot raise more funds.
“We intend to use the net proceeds from the sale of the Class A common shares offered by this prospectus for general corporate purposes, which may include the repayment, refinancing, redemption or repurchase of existing debt or equity, working capital, capital expenditures and other investments “said AMC in Wednesday’s document.
Although the Covid-19 crisis has affected theaters since March, perhaps no network has been hit more than AMC. The company entered the pandemic with almost $ 5 billion in debt, which it accumulated by equipping its cinemas with luxury seats and buying competitors like Carmike and Odeon.
AMC has been focusing on fundraising for months. It has already renegotiated its debt to improve its balance sheet this year and is exploring several options for additional liquidity. It is also trying to find ways to increase the frequency, even as the outbreak in the US worsens.
The company’s stock closed down 5.7% on Wednesday and has fallen 70% since January.