AMC Entertainment said on Thursday (16) it intends to raise $500m in a private offering to boost liquidity while all its sites remain closed during the coronavirus pandemic.
“AMC intends to use the net proceeds from this offering for general corporate purposes, including further increasing AMC’s liquidity,” the company announced after closing its global sites (including 661 in the US) in mid-March and putting all corporate staff including CEO Adam Aron on furlough.
However the move by the world’s third largest exhbitor came with a caveat in supplemental disclosures released on Thursday: “We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct,” it said, ”because we have never previously experienced a complete cessation of our operations, and as a consequence, our ability to be predictive is uncertain.”
Supplemental disclosures revealed that as of March 31 it had a cash balance of $299.8m, which included March borrowings of $215m through its $225m senior secured revolving credit facility, and £89.2m under its £100m revolving credit facility known as the Odeon Revolver.
It said, “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 [private offering], we believe the Company will have sufficient liquidity to withstand a global suspension of operations until a partial reopening ahead of Thanksgiving.
“We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because we have never previously experienced a complete cessation of our operations, and as a consequence, our ability to be predictive is uncertain.”
AMC Entertainment said it expected to receive approximately $19m cash tax refunds, deferral of social security payroll tax matches, and receipt of a payroll tax credit in 2020 under the recently enacted $2.2tn stimulus package. However the company added it could not guarantee it would receive benefits in a timely manner or at all.
Earlier on Thursday the White House released Opening Up America Again, a three-phase plan on how to reopen the US economy that included guidance on theatre protocol.
This week executives at Cinemark, the third largest exhibitor in the US, told Wall Street analysts the chain was targeting July 1 to reopen, based on the current release schedule, which includes Warner Bros’ thriller Tenet from Christopher Nolan on July 17 and Disney’s action adventure Mulan from Niki Caro on July 24.
It is understood the chain anticipates a staggered return to business that could last months, based on available releases, social distancing, government limits, and public confidence.