As film studios continue to push back their big-budget films to 2021, AMC Theatres stated it may run out of cash resources by late 2020 or early 2021.
The theater chain gave this warning in its public filing after credit rating agency S&P Global lowered its credit rating, according to Variety. The agency did this based on an indication that the company may enter liquidation within the next six months. The exhibition company indicated a major factor for the cash depletion was the lack of blockbusters slated for this year. Many scheduled 2020 releases were either pushed back to 2021, such as No Time to Die, or moved to streaming platforms, like Soul.
"Given the reduced movie slate for the fourth quarter, in the absence of significant increases in attendance from current levels or incremental sources of liquidity, at the existing cash burn rate, the Company anticipates that existing cash resources would be largely depleted by the end of 2020 or early 2021," AMC stated in its filing. "Thereafter, to meet its obligations as they become due, the Company will require additional sources of liquidity or increases in attendance levels. The required amounts of additional liquidity are expected to be material."
Along with a lack of fourth-quarter releases, AMC stated audience attendance was down by 85 percent. It mentioned that social distancing guidelines and the closure of major markets such as New York and Los Angeles have played a role in the decline.
The company said in the report, "There can be no assurance that the assumptions used to estimate our liquidity requirements and future cash burn will be correct, or that we will be able to achieve more normalized levels of attendance described above, which are materially higher than our current attendance levels, and our ability to be predictive is uncertain due to the unknown magnitude and duration of the COVID-19 pandemic."
Source: Variety