There is newfound hope for AMC Theatres. The largest theater chain in the U.S. has had a rough month after virtually every theater in the country was forced to close down in mid-March due to social distancing orders. Now, AMC has revealed a new financial plan that has resulted in its stock prices recovering in a big way.
AMC intends to issue a $500 million debt sale, which will give it a lot more cash to get through this rough patch. The funds from the notes being offered would need to be paid back in 2025. As of the end of March, the theater chain had $300 million in cash. The big problem is that the company also has nearly $5 billion in debt, which has put it in serious risk of bankruptcy. AMC had this to say about the new move in a statement.
"Due to significant actions taken by the company, we believe our current cash balance is sufficient to withstand a global suspension of operations until a partial reopening in July. After giving effect to the proposed notes offering, we believe the company will have sufficient liquidity to withstand a global suspension of operations until a partial reopening ahead of Thanksgiving."
Wall Street responded kindly to the news, with the company's shares shooting up by 30 percent, as of this writing. This is all good news for movie lovers who are hoping that the traditional exhibition business will remain part of the cinematic experience once this is all over. There has been growing concern that people will be resistant in going to movie theaters as they did before. While that is still up in the air, at the very least, it seems the biggest chains in the U.S. will be able to resume operations, albeit in a limited capacity.
The White House is currently prepping plans to reopen certain parts of the economy in the coming weeks. Movie theaters are expecting to open back up in mid-to-late July. At first, it will be with mostly older movies until studios provide new releases to showcase. Theaters will also need to adhere to social distancing guidelines, which means heavily reduced capacity in auditoriums. They will also need to take additional sanitization measures.
Most studios delayed their big releases until much later in the year. Christopher Nolan's Tenet is still dated for July 17, with Disney's Mulan set for later in the month. Studios could readjust their calendars once again if theaters open and people do show up. The situation has been evolving rapidly and a lot could change between now and then. For the time being at least, AMC is clinging to life and looks to be there when the dust settles. We'll be sure to keep you posted as the situation develops. This news was previously reported by CNBC.