AMC Theatres has secured a $100 million investment to help keep the beleaguered movie chain afloat, but it says it still needs another $750 million of additional liquidity to fund the company’s cash requirements through the end of 2021.
Mudrick Capital came to AMC’s rescue with the additional funding. The company is an investment firm specializing in distressed credit investing, focused on “find(ing) investments with attractive risk reward ratios.” It also holds second lien notes issued by AMC and, if need be, will convert $100 million of existing AMC debt into AMC common stock.
If all else fails?
Should AMC fail to get more help, it repeated that it may have to enter bankruptcy proceedings. While 400 of its nearly 600 U.S. theaters are still open, bankruptcy may force it to close the rest of those theaters’ doors.
“Given the uncertainty regarding our ability to raise material amounts of additional liquidity and the uncertainty as to the time at which attendance levels might normalize, substantial doubt exists about the company’s ability to continue as a going concern for a reasonable period of time,” AMC said in a regulatory filing.
Another COVID-19 casualty
It’s no surprise, but AMC puts much of the blame squarely on the pandemic’s shoulders.
“A significant spike in coronavirus cases, together with delays of major movie releases or the direct or simultaneous release of movie titles to the home video or streaming markets in lieu of theatre exhibition, have led to theatre closures, prevented the opening of theatres in major markets and have had, and are expected to continue to have in the future, a material adverse impact on theatre attendance levels and our business,” AMC said.
The company’s finger-pointing toward delays and simultaneous releases of movies was aimed directly at Warner Brothers, who recently decided to release its entire 2021 movie slate on its streaming service HBO Max and in theaters simultaneously. AMC has fretted about this possibility for months, and it said in the filing that other studios may follow.
AMC found some respite over the summer with Universal, which it struck a deal with to make movies available sooner outside of theaters. However, that’s the only handshake deal it has been able to make so far.