The AMC Theatre, the largest cinema chain in the United States, is in danger of bankruptcy.
On April 9th, according to the American variety magazine “The Variety”, according to Wall Street analysts, due to the prevalence of coronavirus, the largest chain of theaters in the United States, the AMC Theater ’s The business has been closed, but with the decrease in cash reserves, the possibility of AMC Theater applying for bankruptcy is increasing.
Public information shows that Wanda Group had purchased 100% equity of AMC Entertainment in 2012 with a transaction value of US $ 2.6 billion. Since then, Wanda’s shareholding ratio has declined, but in 2018 Wanda still held nearly half of its shares.
According to “The Variety”, analyst Eric Handler pointed out in a report: “According to our opinion, the theater must at least Closed until August, and we believe that AMC lacked the liquidity to maintain operations before this, we expect the company to face bankruptcy filing soon. “He downgraded the AMC theater stock rating from” neutral “to” sell. ”
The AMC financial report shows that as of December 31, 2019, cash in stock and equivalents were US $ 265 million, as well as US $ 332 million available through credit lines. Handler believes that AMC has less financial flexibility. “We believe that in an environment without revenue, the company’s monthly cash consumption rate is $ 155 million per month, which may maintain AMC’s liquidity from June to July.”
On April 9, AMC Entertainment Holdings ’share price fell by more than 4%. In response, AMC did not immediately respond to comment.
Handler believes that even if AMC is able to use government bailout funds, the company ’s high leverage ($ 4.75 billion in debt) will also lead to difficult dilemmas, thus making Reorganization is inevitable. Handler predicts that AMC theaters will face bankruptcy and reorganization.
Previously, in order to reduce costs during the coronavirus epidemic, the AMC Theater laid off more than 600 corporate employees, including CEO Adam Allen. AMC also informed the venue lessor that the rent will not be paid from April when the cinema is closed.