Coronavirus may put the world’s largest theater chain out of business. Blaming the far-reaching impact of COVID-19, AMC Theatres told regulators today that it cannot predict if or when business will return to normal, and said loans may not be enough to cover its cash-flow needs.
“We may not be able to obtain additional liquidity and any relief provided by lenders, governmental agencies, and business partners may not be adequate and may include onerous terms,” the 8K filing stated. “Due to these factors, substantial doubt exists about our ability to continue as a going concern for a reasonable period of time.”
AMC Theaters currently operates 996 theatres and 10,993 screens in 15 countries. In the U.S., AMC has 630 theatres with 8,048 screens. In the first three months of 2020, AMC reported a net loss of somewhere between $2.12 billion and $2.42 billion. In the same period of 2019, it reported a net loss of $130.2 million. It also identified its pending inability to service its debt.
The filing also outlined concerns that included when studios will make films available for release in theaters; employees’ willingness to work at the theaters; and the possibility that future COVID-19 outbreaks will mean further closures. It also identified a risk of “damned if you do/damned it you don’t”: If the theaters remain open when the public still views them as a health risk, that perception could cause financial damage of its own.
“If we do not respond appropriately to the pandemic, or if customers do not perceive our response to be adequate, we could suffer damage to our reputation, which could significantly adversely affect our business,” the filing stated.
The 8K filing closed with an extensive list of more than 30 “particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements.” In addition to the impact of COVID-19, these included: “Our lack of control over distributors of films,” “increased use of alternative film delivery methods or other forms of entertainment,” “shrinking exclusive theatrical release windows,” and “our ability to utilize interest expense deductions may be limited annually due to Section 163(j) of the Tax Cuts and Jobs Act of 2017.”
AMC will report full financial results for first-quarter 2020 after the market closes on June 9. Read the filing in full here.