AMC Theatres May Never Recover and Shut Down for Good

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  1. #1
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    AMC Theatres May Never Recover and Shut Down for Good

    AMC Theatres May Never Recover and Shut Down for Good

    S&P Global downgraded AMC Theaters' credit rating last week to a CCC-. They were originally at a B rating before the widespread movie theater chain closures occurred. This brings the popular theater chain from "Highly speculative" to "Default imminent, with little prospect for recovery." In other words, there's a pretty good chance AMC won't be opening back up when all of this is over, which is terrible news for employees and moviegoers who were hoping for things to get back to normal soon.

    While President Donald Trump is giving an estimate of April 30th for businesses to open again, there are other analysts who believe this could last well into the summer. S&P analysts state, "We expect AMC Entertainment Holdings Inc.'s AMC theaters will remain closed beyond June," due to the impact of global current events. You can read more from their statement below.

    "We do not believe AMC has sufficient sources of liquidity to cover its expected negative cash flows past mid-summer, and we believe the company will likely breach its 6x net senior secured leverage covenant when tested on Sept. 30, 2020, absent a waiver from its lenders."
    AMC is/was the biggest theater chain in North America. However, like a lot of big businesses, it is drowning in debt and it's only getting worse now that all of their theaters are closed. It is believed that the same thing could happen to stores like Macy's and The Gap. This is proving to be catastrophic across the board for businesses big and small. AMC reported a $5 billion-plus deficit at the end of 2019 and losses of $149 million for the year. This is after netting $110 million in 2018.

    AMC's top executives have announced they will take significant pay cuts to keep everything afloat for as long as they can. Additionally, the company has furloughed 600 corporate employees. S&P analysts are unsure if all of the cost cutting measures will be able to help out in the long run. They had this to say in a recent report.

    "Even after significantly lowering its fixed costs and capital spending requirements, we only expect the company's liquidity sources to last through mid-summer and are revising our assessment of AMC's liquidity to weak. The company will likely pursue incremental financing through the CARES act or its lenders, but it is unclear when or if it will be able to secure additional liquidity."
    If AMC is success in gaining financing through the CARES act, they may be able to keep their doors open. However, that will all depend on when everything is able to get back to some form of normalcy. For now, it doesn't look good, which means everybody may have to stay indoors for a lot longer than expected. Right now, this is pretty much on a day to day basis, so we're just going to have to wait this out. This news was first announced by S&P Global.

    Source: https://movieweb.com/amc-theatres-reopening/

  2. #2
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    Last time I went to a matinee show and it was still almost 50$ with drinks and popcorn.

    Sorry for their employees but I’m sure the upper echelons of that company are beyond comfortable.

  3. #3
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    Wouldn't surprise me at all.

    Theaters don't get even half the traffic as opposed to ten years ago so, I could see them not recovering.

  4. #4
    Arnold
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    I have an 85" Sony LED with amazing surround sound, that combined with Netflix and Prime video there is not much of a reason to go to a theater anymore.

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