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AMC Theatres staves off bankruptcy just in time for studios to delay their films all over again

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AMC Theatres has raised nearly $1 billion in funding since December 14th, staving off bankruptcy for several more months, the company announced today. The announcement comes just days after several major studios, including Paramount, Sony, and Disney’s Fox, all delayed many of their films to the latter half of the year.

In total, AMC raised $917 million, according to public documents. More than half of that capital arrives in the form of equity that comes with selling 164.7 million new common shares. AMC raised another $411 million in incremental debt that is scheduled to be paid off by mid-2023, according to the filing. As such, AMC Theatres executives now believe they have a new “financial runway” that extends “deep into 2021.”

“This means that any talk of an imminent bankruptcy for AMC is completely off the table,” AMC CEO Adam Aron said in a press release.

How long that runway will actually last if nothing changes isn’t crystal clear, but public documents filed by the company say that “in the absence of any increase in attendance levels” and assuming that AMC will still have to pay its leases without any additional cash raised, “our existing liquidity would extend our operations through to July 2021.”

Still, having a deep runway is good news for AMC Theatres executives, who will likely watch as more films are delayed into the latter half of 2021. Films like Morbius, Ghostbusters: Afterlife, No Time To Die, Uncharted, and more have seen their release dates relegated to October 2021 and beyond, with Uncharted moving in 2022. Industry insiders predict that other major films slated for the first half of 2021 — F9 and Black Widow, for example — will also likely move.

Studios looking to hit the magical $1 billion box office revenue number likely see no upside to releasing movies in a market where theaters are either entirely closed or operating at a limited capacity. AMC Theatres currently has 438 of its 593 theaters in the US open as of January 21st, according to public documents. Theaters that remain closed, however, exist in some of the United States’ most important major markets, including New York City and Los Angeles. As such, AMC Theatres reported an overall attendance decline of 92.3 percent compared to 2019, according to public documents.

Other films that studios are less positive will come with a guaranteed return on investment are being sold off; Netflix just acquired The Mitchells vs. The Machines, an animated film formerly called Connected that’s directed by Phil Lord and Chris Miller, from Sony. While the theater chains and studios struggle to figure out when they can start ushering people into theater seats to watch films, streamers like Netflix continue to thrive as people try to find new things to watch while being forced to remain home.

Since everything is up in the air — that’s according to AMC executives — the actual runway of time that the additional cash raised will buy the company is dependent on “future attendance levels.” Future attendance levels are based on a couple of different criteria, including:

  • vaccination rollout around the world, but especially in the United States
  • government orders regarding restrictions
  • consumer behavior in a post-pandemic world

Cities like Paris, Toronto, and London have set heavier lockdown restrictions as COVID-19 cases rise, meaning that nonessential outings like going to the movies simply aren’t possible. In the United States, cities like Los Angeles and New York City have prevented movie theaters from opening since the pandemic began and, as cases rise, may continue to prevent nonessential gatherings. If a large portion of the population is vaccinated by summer, things may change, but it’s unclear if the United States will hit those goals.

Then there’s consumer behavior. This is an element of post-pandemic life that studios like Disney have warned their own shareholders about. Will people feel comfortable sitting in packed theaters with strangers again, hearing people sneeze and cough, especially during the winter months? Disney executives told shareholders they can’t predict that, but it’s something that AMC Theatres executives are also likely thinking about as they try to wrangle more cash from shareholders to stay afloat.

For now, however, AMC has a future in front of it — at least for a little while longer. Like everything these days, it’s all dependent on what happens next.

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