World's biggest cinema chain AMC warns it may not survive the pandemic

AMC is the biggest movie theatre chain in the US and Europe with about 1,000 cinemas across the globe. PHOTO: AFP

Updated

Published

Jun 04, 2020, 08:55 AM

NEW YORK (REUTERS, BLOOMBERG) - AMC Entertainment Holdings Inc, the world's biggest movie theatre operator, signaled "substantial doubts" about its ability to continue operating, if the company was forced to keep its cinemas closed for a longer period because of the Covid-19 pandemic.

The pandemic has shuttered movie theatres worldwide since mid-March and many potential box-office draws such as "Top Gun: Maverick", the new James Bond film "No Time To Die" and Walt Disney's "Mulan" have been pushed later into the year. It has also led film studios to explore releasing more movies directly to viewers over the internet.

"We cannot predict when or if our business will return to normal levels," AMC, which is controlled by Chinese conglomerate Dalian Wanda, said in a regulatory filing on Wednesday (June 3).

In the United States, individual states are now considering when to allow businesses to reopen.

AMC said it had begun a ramp-up in cash spending as it aims for a summer reopen but may not have sufficient liquidity to tide over until its cash-generating operations are back to normal. The company had a cash balance of US$718.3 million (S$1 billion) as of April 30, and has said it had enough liquidity to sustain the closures till the end of July.

However, the company raised fears that even after theatres reopen it may not have enough films to show and attendance will be further impacted as people may switch over to other forms of entertainment or be wary of health risks.

It said it expected to report a loss of between US$2.12 billion to US$2.42 billion for the first quarter ended March 31, largely due to an impairment charge of about US$2 billion.

AMC is the biggest movie theatre chain in the US and Europe with about 1,000 cinemas and 11,000 screens across the globe, according to its website. It was forced to close all of its approximately 600 US locations in March after public officials placed limits on public gatherings to prevent the spread of the virus.

The company is also seeking to tame its debt load by asking subordinated bondholders to accept a steep haircut of about 50 per cent on existing debt as it casts doubt on its ability to repay future borrowings, according to a regulatory filing on Wednesday.