AMC Theaters has raised nearly $ 1 billion in financing since December 14, preventing bankruptcy for several more months, the company announced today. The announcement comes just days after several major studios, including Paramount, Sony and Disney’s Fox, all delayed many of their films for the second half of the year.
In total, AMC raised $ 917 million, according to public documents. More than half of that capital comes in the form of equity that comes with the sale of 164.7 million new common shares. AMC raised an additional $ 411 million in incremental debt that is scheduled to be paid in mid-2023, according to the document. As such, executives at AMC Theaters now believe they have a new “financial trail” that extends “deeply into 2021”.
“This means that any conversation about an impending AMC bankruptcy is completely out of the question,” said AMC CEO Adam Aron in a press release.
How long will the track really take if nothing changes is not crystal clear, but public documents filed by the company say “in the absence of any increase in service levels” and assuming that AMC will still have to pay its rent without any additional money raised, “our existing liquidity would extend our operations until July 2021.”
Still, having a deep walkway is good news for AMC Theaters executives, who are likely to watch as more films are delayed until the second half of 2021. Movies like Morbius, Ghostbusters: life after death, No time to die, Unknown, and more saw their release dates relegated to October 2021 and beyond, with Unknown moving in 2022. Industry experts predict that other major films will be released in the first half of 2021 – F9 and Black Widow, for example – will probably also move.
Studios looking to reach the magic box office revenue of $ 1 billion are unlikely to see any advantage in launching films in a market where cinemas are fully closed or operating with limited capacity. AMC Theaters currently has 438 of its 593 cinemas in the United States open as of January 21, according to public documents. Cinemas that remain closed, however, exist in some of the most important major markets in the United States, including New York and Los Angeles. As such, AMC cinemas reported a general audience drop of 92.3 percent compared to 2019, according to public documents.
Other films that the studios are less positive will come with a guaranteed return on investment being sold; Netflix just acquired The Mitchells vs. The Machines, an animated film previously called Connected directed by Phil Lord and Chris Miller of Sony. While movie theaters and studios struggle to find out when they can start taking people to the cinema seats to watch movies, streamers like Netflix continue to thrive as people try to find new things to watch while being forced to stay at home.
Since everything is up in the air – this is according to AMC executives – the actual time that the additional money raised will buy the company depends on “future attendance levels”. Future frequency levels are based on a few different criteria, including:
- vaccination implementation worldwide, but especially in the United States
- government orders on restrictions
- consumer behavior in a post-pandemic world
Cities like Paris, Toronto and London have put tougher restrictions as COVID-19 cases have increased, meaning that non-essential outlets like going to the movies are simply not possible. In the United States, cities like Los Angeles and New York have prevented movie theaters from opening since the pandemic began, and as cases increase, they may continue to prevent non-essential meetings. If a large part of the population is vaccinated by summer, things may change, but it is not clear whether the United States will achieve these goals.
Then there is consumer behavior. This is an element of post-pandemic life that studios like Disney have warned their own shareholders about. Will people feel comfortable sitting in cinemas crowded with strangers again, listening to people sneeze and cough, especially during the winter months? Disney executives have told shareholders that they cannot predict this, but it is something that AMC Theaters executives are probably also thinking about as they try to get more money from shareholders to stay afloat.
For now, however, AMC has a future ahead of it – at least for a little while longer. Like everything today, it all depends on what happens next.