Deck chairs sit stacked in front of a closed movie theater during the global coronavirus (COVID-19) outbreak in Santa Monica, California, the United States, March 16, 2020.
Lucy Nicholson | Reuters
AMC shares fell Wednesday as investors tried to gauge the likelihood of filing for bankruptcy.
On Tuesday, the world's largest movie theater chain warned investors that a combination of poor attendance and limited new movies is in dire need of financial support. The company said it might run out of cash by the end of this year or early next year, unless its circumstances change.
Adam Aron, CEO of AMC, told Bloomberg News in an interview on Tuesday that his efforts are focused on raising fresh money to bridge it until coronavirus restrictions are eased and movie release schedules settle normalize. However, a separate report from the media company on Tuesday said a potential bankruptcy was an option to ease the company's debt burden. This report cites people with knowledge of the matter.
According to Bloomberg, these people said no formal proposal had been made to AMC.
AMC shares fell more than 18% on Wednesday, falling below $ 3 a share. AMC stock, valued at $ 387 million, is down roughly 60% this year. Recently, stocks were down about 14%.
On Wednesday, a company spokesperson told CNBC that AMC was not preparing for bankruptcy or bankruptcy talks with lenders and that it was calling the report "false".
AMC has focused on fundraising for months. The cinema chain has already renegotiated its debt to improve its balance sheet this year and is exploring various ways to raise additional sources of liquidity. Attempts are also being made to find ways to increase visitor numbers, which are down 76% from last year.
The company announced Tuesday that it is reviewing additional debt and equity financing and is renegotiating with landlords over lease payments, potential asset sales, a joint venture with an existing business partner and minority interests in its shares.
Much of AMC's financial troubles can be attributed to the lack of returning customers and a limited number of new movie releases.
Blockbuster films have repeatedly been postponed or switched to streaming services until 2021. "Coming 2 America" will now switch to Amazon Prime Video, leaving only three main films on the schedule for 2020: "The Croods: A New Age", "Free Guy" and "Wonder Woman 1984".
In addition, due to ongoing restrictions on theater operations, AMC is missing out on potential revenue from states with higher ticket prices and a high concentration of moviegoers.
In its public filing, AMC stated that 494 of its 598 U.S. theaters have reopened, but with a limited capacity of 20% to 40%. The remaining 104 theaters are in California, Maryland, New York, North Carolina, and Washington. Although these theaters only make up around 17% of the company's total floor space, they accounted for nearly a quarter of the company's total revenue last year.
AMC said it is in talks with local and state government officials from these states, but there is no clear timing for these sites to reopen.