World's largest cinema chain shoring up capital to keep afloat

UNITED STATES • AMC Entertainment Holdings' executives are focused on raising enough capital to keep the struggling theatre chain afloat until summer, when they believe a Covid-19 vaccine and a backlog of blockbuster films will reverse its fortunes.

The world's largest cinema chain said on Nov 2 it has enough cash to last until early 2021, assuming attendance remains at its current, modest level.

Chief executive officer Adam Aron said he was talking to more than a dozen strategic investors about potential equity investments, as well as current lenders to shore up its liquidity until summer.

"It all really comes down to one thing: We believe that we will need to raise more capital," Mr Aron said on a call with analysts after reporting a third-quarter loss of US$905.8 million (S$1.2 billion).

AMC is still in the midst of perhaps the most gruelling year in its century-long history. The company closed its entire domestic theatre circuit in March as the pandemic spread across the United States and has reopened under difficult circumstances.

There are few new films to draw in audiences to the auditoriums and the theatres that are open must cap ticket sales to adhere to social distancing rules.

The Leawood, Kansas-based company said its revenue tumbled to US$119.5 million in the third quarter, plunging from almost US$1.32 billion a year ago.

AMC still faces more obstacles. Based on current attendance and agreements with landlords, it projects its cash burn will increase going into the fourth quarter, rising to more than US$100 million a month. Additionally, some of the 261 of its 358 international locations that had previously reopened will have to close again, as the virus spread worsens in Europe.

AMC, which is controlled by billionaire Wang Jianlin's Dalian Wanda Group, may not need quite as much cash if studios start releasing new films.

The next big potential blockbuster is not scheduled until Christmas Day, when Warner Bros' Wonder Woman 1984 is set to hit cinemas. Mr Aron said he believed the studio was trying its hardest to stick to that date.

Altogether he calculated that 44 movies scheduled to come out in 2020 were deferred until 2021 or later, suggesting a windfall for theatres that can survive the pandemic.

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A version of this article appeared in the print edition of The Straits Times on November 09, 2020, with the headline 'World's largest cinema chain shoring up capital to keep afloat'. Print Edition | Subscribe