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Sydnee Gatewood
Sydnee Gatewood
Articles (3566) 

AMC Entertainment Shares Rise as It Staves Off Bankruptcy

Movie theater chain raises $917 million

January 25, 2021 | About:

After warning investors in October that bankruptcy was a strong possibility as the Covid-19 pandemic kept customers home and the release of several major blockbuster films have continually been delayed, AMC Entertainment Holdings Inc. (NYSE:AMC) announced on Monday that it has raised enough financing to remain open and operational well into 2021.

Having secured more than $1 billion in cash between April and November 2020, the Leawood, Kansas-based movie theater chain said it raised an additional $917 million over the past six weeks through new equity and debt capital.

"This means that any talk of an imminent bankruptcy for AMC is completely off the table," CEO Adam Aron said.

Around $500 million of this financing came from issuing approximately 165 million new shares and a previously announced investment deal with Mudrick Capital Management. AMC has also executed commitment letters for $411 million in incremental debt capital as a result of increasing and refinancing its European revolving credit facility.

While AMC is hoping to see attendance at its theaters increase globally as the general population continues to receive the Covid-19 vaccine, it cautioned that future performance still remains uncertain.

"Looking ahead, for AMC to succeed over the medium term, we are going to need for much of the general public in the U.S. and abroad to be vaccinated," Aron said. "To that end, we are grateful to the world's medical communities for their heroic efforts to thwart the Covid virus. Similarly, we welcome the commitment by the new Biden administration and of other governments domestically and internationally to a broad-based vaccination program."

The company also said it is going to continue pursuing negotiations with theater landlords in regard to the amount and timing of owed lease payments.

Shares of AMC were up over 20% on Monday at $4.36. GuruFocus estimates the stock tumbled around 70% in 2020.

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Similarly, shares of Cinemark Holdings Inc. (NYSE:CNK) gained 9.15% on Jan. 25, while Imax Corp. (NYSE:IMAX) rose 2.17%.

Disclosure: No positions.

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