The future of movie theaters remains somewhat up in the air right now, and AMC – the largest theater chain in the United States – is suffering. As a result, AMC has just filed to sell up to 50 million more shares of stock with the hopes of staying solvent (solvency allows a company to meet its long-term debts and financial obligations). As a result, the company’s stock was down nearly 5% as of today. AMC previously reported they would need at least $750 million to make it through 2021.
While we’re all hoping for better things in 2021, don’t expect some sort of miraculous switch to be flipped on January 1. The coronavirus continues to be a real problem in all sorts of ways. Yes, there’s a coronavirus vaccine, but by all accounts, it’s not being distributed as quickly as it should be. As the Washington Post reports, “80 to 85 percent of Americans need to be vaccinated to reach herd immunity,” but, “At the current rate, it would take the United States approximately 10 years to reach that level of inoculation.”
Movie theaters continue to be hard-hit by the current situation, especially AMC, the nation’s biggest theater chain. In March of 2020, AMC shut down all of its theaters due to the COVID-19 pandemic, with the understanding being that the shutdown would last about six to twelve weeks. By June, however, AMC was saying there was “substantial doubt” they could remain in business. The theater chain started reopening locations in August, because once upon a time, many folks were operating under the incorrect assumption that the virus would be gone by summer. It wasn’t, and AMC continued to flounder, reporting that their existing cash “would be largely depleted by the end of 2020 or early 2021.”
Over the Christmas weekend, Wonder Woman 1984 managed to open in theaters, and did better-than-expected, resulting in the biggest post-pandemic opening for a movie yet. However, that still wasn’t enough, and it was reported that AMC shares were at their lowest point since early November. Today, Deadline has revealed that the theater chain has filed to sell 50 million more shares with hopes of staying afloat. As of December 28, the company has raised $104 million through stock sales, but added that “bankruptcy remains a risk if it can’t continue to raise the funds it needs waiting for the theatrical exhibition business to recover.”
In their filing, AMC said:
“Our ability to obtain additional liquidity, which if not realized or insufficient to generate the material amounts of additional liquidity that will be required until we are able to achieve more normalized levels of operating revenues, likely would result with us seeking an in-court or out-of-court restructuring of our liabilities, and in the event of such future liquidation or bankruptcy proceeding, holders of our common stock and other securities would likely suffer a total loss of their investment.”
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