AMC Theaters is the largest theater chain in the United States with 600 locations across the country. It was a blow to the chain and many others when they were forced to sink in the context of the COVID-19 pandemic and despite AMC CEO Adam Aron, who said he was optimistic about what AMC could open its doors in mid-June, according to a new report: the brand may never recover from the formwork of its doors.
According to an “S&P Global” report, AMC Entertainment’s credit rating was downgraded from “B” to “CCC-“, which means: ” Imminent default, with little prospect of recovery.“What surprised me the most about this report was finding out that AMC has been faltering for years, having problems long before this pandemic started. Here is the full statement from S&P Global:
“We expect AMC Entertainment Holdings Inc. (AMC) cinemas to remain closed beyond June due to the impact of the global coronavirus pandemic. We do not believe that AMC has sufficient sources of liquidity to cover its expected negative cash flows in mid-summer. Although this is unlikely, we could increase the rating if AMC was able to obtain additional liquidity. without further burdening its capital structure and if we expected the company to be able to generate substantial cash flows in 2021. This would likely require conclusive knowledge of the duration of the theater closings and the idea that the box office would return to normalized levels in 2021. ”
This is not the news that employees and moviegoers were hoping for in terms of returning to AMC in the near future. It is very possible that the channel may get some sort of bailout and help from outside sources before it has to publicly announce a permanent closure, but the news does not make the situation look promising. It doesn’t help that AMC was struggling before the pandemic started, although it is the largest presence of movie theaters in the United States. AMC declared a deficit of more than $ 5 billion at the end of 2019 and losses of $ 149 million for the year. This after deducting $ 110 million in 2018. Senior CMA officials have announced that they will take major wage cuts to keep everything afloat as long as they can. In addition, the company has authorized 600 employees for the company, but S&P reports seem to suggest that this will not be enough.
What could help AMC is if it obtains funding through CARES ACT, a law designed to combat the economic fallout from the 2020 coronavirus pandemic in the United States. There is also the option that another big chain, like Regal, could buy the company and convert the AMC cinemas to their own. Ultimately, there must be a clear vision that we will return to normality at any time, but this perspective seems rather vague. The summer outings mostly delayed their release until June, with only Pixar’s Soul remaining on June 19. its release in March due to the coronavirus pandemic. Will things be back to normal by then? AMC really needs it because without significant revenue, the future of the channel looks very uncertain.
Do you think AMC will survive the closures of COVID-19?