AMC theater chain: 'substantial doubt' of surviving virus

AMC Entertainment has "substantial doubt" that it can remain in business after closing its theaters as part of the government-imposed shutdown intended to curb the spread of the novel coronavirus, the company said in a regulatory filing.

The company is required to issue such a warning to investors if finances deteriorate, but the filing with the US Securities and Exchange Commission (SEC) doesn't necessarily mean the company will go out of business.

AMC said it expected revenue to fall to $941.5 million in the first quarter from $1.2 billion in the same period a year ago, a decline of about 22 percent.

It expects to lose between $2.1 billion and $2.4 billion for the quarter ended March 31. The company will release earnings after Tuesday's market close.

In 2012, Wanda Group, a Chinese conglomerate, acquired AMC Entertainment Holdings for $2.6 billion. AMC, based in Leawood, Kansas, operates about 1,000 theaters with 11,000 screens worldwide, including about 350 theaters in the US and Canada with about 5,000 screens.

In the US, AMC said it holds the largest or second-largest market share in 21 of the 25 biggest metropolitan areas. It's also first or second in market share in Europe and the Middle East.

On April 30, the company said it had $718.3 million in cash, but following closure of its theaters, it warned in the filing, "We are generating effectively no revenue."

In April, AMC said a new debt offering would provide financing necessary to remain solvent through November, and the company therefore could, if necessary, open some theaters as late as the Thanksgiving holiday.

AMC and rivals Regal Cinemas and Cinemark Holdings have said theaters won't reopen until later this month or July at the earliest, even if some states have already allowed reopenings.

The second quarter may be worse for theater operators as Hollywood studios delay the release of new movies.

Some producers have delayed release dates — as with the 25th James Bond film, No Time to Die, which moved from April to November — or shifted their movies to on-demand release, including Trolls World Tour, Scoob! and The King of Staten Island.

NBC Universal CEO Jeff Shell said the company may release movies simultaneously online and at theaters. In response, AMC said it would no longer showcase Universal's movies.

But a few movies are still scheduled for release this summer, including Russell Crowe's Unhinged on July 3, Christopher Nolan's Tenet on July 17, Disney's Mulan on July 24 and Wonder Woman 1984 on Aug 14.

However, the release dates are tentative and could change, depending on market conditions.

During the downturn, AMC furloughed in-theater employees, suspended dividends and halted share-buybacks. It cut salaries of corporate-level employees.

The company is also seeking to defer or reduce rent payments on its theaters.

AMC said it has enough cash on hand to resume operations this summer or later, but warned in a filing with the SEC:

"If we do not recommence operations within our estimated timeline, we will require additional capital, if for example, our operations do not generate the expected revenues or a recurrence of Covid-19 were to cause another suspension of operations. Due to these factors, substantial doubt exists about our ability to continue as a going concern for a reasonable period of time."

Movie theater stocks plunged during the COVID-19 pandemic but have edged up recently.

AMC's stock closed Thursday at $5.38 a share, a decline of 56.93 percent from its 52-week high of $12.49.

Cinemark Holdings closed at $16.72 a share, a decline of 60.19 percent from the 52-week high of $41.60.