AMC Theatres, the largest theater chain in the U.S., continues to find itself in dire straits. The company recently revealed that they expect to be out of money by early 2021 as theater attendance has failed to grow in recent months. Now, the company has warned its investors that bankruptcy may be on the table unless they can navigate an unlikely financial turnaround.

The movie theater chain made the reveal in a recent filing with the Securities and Exchange Commission. They have made a deal with Citigroup Global Markets and Goldman Sachs to sell up to 15 million shares. The money raised will be used for "general corporate purposes." In the filming, AMC laid out a grim but not unlikely scenario that may be coming in the not-too-distant future.

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"In the event the company determines that these sources of liquidity will not be available to it or will not allow it to meet its obligations as they become due, it would likely seek an in-court or out-of-court restructuring of its liabilities, and in the event of a future liquidation or bankruptcy proceeding, holders of the company's common stock would likely suffer a total loss of their investment."

When the company warned recently that they might run out of cash, they stated that a lot of money would need to be raised, or that an unexpected turnaround in theater attendance would need to happen. Unfortunately, Tenet and The New Mutants discouraged studios from releasing other big movies and the box office has essentially been a shadow of its former self ever since theaters reopened in August. AMC further reiterated in the filming that, without significant cash flow, they will not be able to operate and stockholders would be out of luck.

"We will require significant amounts of additional liquidity and there is substantial doubt about our ability to continue as a going concern for a reasonable period of time; holders of our Class A common stock could suffer a total loss of their investment."

The one bit of good news AMC got recently is that New York is allowing certain theaters outside of New York City to open as early as Friday. This will finally open up one of the biggest moviegoing markets in the world. At the time, AMC's stock prices jumped more than 20 percent. However, after news of this recent SEC filming broke, they plunged around 11 percent. AMC's stock has lost around 56 percent of its value during 2020.

The bigger picture here has to do with the movie industry as a whole. A great many big movies that are counting on box office dollars have been pushed to 2021. What happens if the biggest theater chain in the U.S. has to close its doors? What happens if chains like Regal and Cinemark follow suit? There are no easy answers right now but the current infrastructure that has defined the movie industry for years is in jeopardy. This news was previously reported by Variety.

Ryan Scott at Movieweb
Ryan Scott