#AMC Theatres Could Benefit from Bankruptcy Suggest Box Office Analysts
“#AMC Theatres Could Benefit from Bankruptcy Suggest Box Office Analysts”
AMC is roughly $5 billion in debt. They are bleeding cash and having difficulties raising funds. The company’s stock prices have taken a nosedive in 2020. Bankruptcy seems inevitable. Though that may not be the end for the chain. It may, ultimately, put them in a better position to survive, as revealed in a new report. Doug Stone, president of Box Office Analyst, had this to say.
“Frankly I believe that Chapter 11 is really the only path that will lead to AMC surviving. I cannot imagine that there is an appetite out there for another $750 million of stock sales, and any debt they assume will be at astronomical rates.”
With $5 billion on its balance sheet, AMC can ill-afford to take on more debt, especially at a very high interest rate. Should the company declare bankruptcy, it will allow them to reorganize their debt, restructure and reposition themselves for the future, which is brighter than it once looked. Wedbush analyst Michael Pachter had this to say.
“The easy answer is that if they declare bankruptcy, it is likely to be a reorganization rather than a liquidation. In bankruptcy, they can wipe out their lease obligations and renew those leases that make sense, so arguably they can lower their overall operating expense.”
Vaccines are currently rolling out around the world. While the first chunk of 2021 is still expected to be brutal at the box office, many analysts feel much better about the back half of the year. By then, AMC could get its ducks in a row and be ready for a return to normal business levels. Or at least sustainable business levels. Eric Wold, senior analyst at B. Riley Securities, had this to say.
“We have already seen very strong movie-going response within those countries that opened up earlier than the U.S., especially within China, which, we believe, provides a strong early look into what can be expected here in the U.S. And given what AMC and many other exhibitors have learned… in terms of operating more efficiently, along with the flexibility of the company’s landlord partners, we could actually see AMC emerge from this in a stronger position operationally than [before] that would provide a path toward deleveraging the balance sheet once again.”
There will be no shortage of movies to screen next year as most major studios had to push big titles to 2021 with theaters being closed this year. Though WarnerMedia did recently announce that all of its slate next year will be debuting simultaneously on HBO Max and in movie theaters. It’s a move that could hurt theater chains once life does begin to normalize, and one that AMC has expressed its displeasure with. That aside, it seems AMC does have a path to survival, even if it proves to be a messy one. This news comes to us via CNBC.
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