AMC Theatres Has Substantial Doubt About Staying In Business

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AMC Entertainment Holdings, Inc., the world's largest theatre chain, said it has substantial doubt in its ability to continue its business as theaters across the world remain closed for months now following coronavirus or Covid-19 pandemic.

In a regulatory filing, the company said it is "generating effectively no revenue", and that additional capital, if needed, may not be available. AMC Theatres had closed all AMC locations in US starting March 17 following the virus outbreak.

For its first quarter concluded in March, the company projects to record net loss between $2.12 billion and $2.42 billion due to an impairment charge, and around 22 percent drop in revenues.

As of April 30, 2020, the company had a cash balance of $718.3 million, including borrowings. AMC said it has begun to ramp up cash spend with the intention of reopening theatres this summer, hoping for the potential lifting of various government operating restrictions. Despite this, the company warns that distributors worldwide may delay the release of new films until restrictions are eased more broadly.

The company said, "If we do not recommence operations within our estimated timeline, we will require additional capital and may also require additional financing if, for example, our operations do not generate the expected revenues or a recurrence of COVID-19 were to cause another suspension of operations. Such additional financing may not be available on favorable terms or at all."

Due to these factors, substantial doubt exists about the ability to continue as a going concern for a reasonable period of time, AMC noted.

Across the world, small and large theaters were closed and major movie houses delayed the release of new films such as "Mulan", "Wonder Woman 1984" and "F9". The theaters' future remains uncertain as many companies opt for a digital release as majority of audiences can watch movies at home.

According to AMC, even when the COVID-19 pandemic subsides, there is no guarantee that it will recover as rapidly as other industries, or as rapidly as others within the industry.

As of March 31, 2020, AMC operated 996 theatres and 10,973 screens in 15 countries. In the U.S. markets, it operated theatres in 44 states and the District of Columbia.

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