AMC Theaters has raised nearly $ 1 billion in funding since Dec. 14 and averted bankruptcy for several more months, the company announced today. The announcement comes days after several major studios, including Paramount, Sony and Disney’s Fox, all delayed many of their films until the latter half of the year.
According to public documents, AMC raised a total of $ 917 million. More than half of the capital comes in the form of shares along with the sale of 164.7 million new ordinary shares. According to the submission, AMC raised another $ 411 million in incremental debt, which according to the submission would be paid by mid-2023. As such, AMC Theaters’ executives believe they have a new “financial runway” that extends to deep into 2021.
“This means that any talk of a looming 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 is not crystal clear, but public documents submitted by the company say that “in the absence of an increase in attendance levels” and assume that AMC will still have to lease paid without any extra cash raised, “our existing liquidity will extend our operations until July 2021.”
Another deep runway is good news for executives of AMC Theaters, who are likely to watch as more films are delayed until the latter half of 2021. Morbius, Ghostbusters: The Hereafter, No time to die, Unknown, and more have seen their release dates after October 2021 and beyond, with Unknown moves in 2022. Insiders in the industry predict that other major films are planned for the first half of 2021 – F9 and Black widow, for example – will probably move too.
Studios that want to reach the magic revenue figure of $ 1 billion probably see no benefit in releasing movies in a market where theaters are completely closed or restricted. According to public documents, AMC Theaters currently opens 438 of its 593 theaters in the United States on January 21st. Theaters that are still closed, however, consist of some of the most important markets in the United States, including New York City and Los Angeles. As such, according to public documents, AMC Theaters reported an overall decline in attendance of 92.3 percent compared to 2019.
Other films that studios are less positive will be sold with a guaranteed return on investment; Netflix just acquired The Mitchells vs The Machines, an animated film mentioned earlier Linked it’s led by Phil Lord and Chris Miller, of Sony. While theater chains and studios are struggling to figure out when they can usher people into theater chairs to watch movies, streamers like Netflix still thrive as people try to find new things to watch while being forced to stay home.
Since everything is in the air – according to AMC executives – the actual runway of time that the additional cash raised depends on the company’s ‘future attendance levels’. Future attendance levels are based on a few different criteria, including:
- vaccination worldwide, but especially in the United States
- government orders regarding restrictions
- consumer behavior in a post-pandemic world
Cities such as Paris, Toronto and London have imposed greater closure restrictions as the incidence of COVID-19 rises, meaning that non-essential outings such as going to the movies are simply not possible. In the United States, cities like Los Angeles and New York City have prevented movie theaters from starting since the pandemic, and as the number of cases increases, insignificant gatherings can occur. If a large portion of the population is vaccinated by the summer, things could change, but it is unclear whether the United States will achieve the goals.
Then there is consumer behavior. This is an element of the post-pandemic life for which studios like Disney have warned their own shareholders. Will people feel comfortable sitting in full theater with strangers again and hearing people sneeze and cough, especially during the winter months? Disney executives have told shareholders they can not predict this, but it’s something AMC Theaters executives are probably thinking about as well, as they try to wrest more cash from shareholders to keep their heads above water.
For now, though, AMC has a future ahead of it – at least for a while longer. Like everything these days, it all depends on what happens next.