AMC Theaters Considers Bankruptcy After Moviegoers Stay Home

(Bloomberg) -- AMC Entertainment Holdings Inc. is considering a range of options that include a potential bankruptcy to ease its debt load as the pandemic keeps moviegoers from attending and studios from supplying films.

Lenders to the world’s biggest cinema chain have held preliminary talks among themselves about providing the movie-theater company with financing if it decides to file for Chapter 11 court protection, according to people with knowledge of the matter. The fresh cash would keep AMC in business while it crafts a recovery plan, the people said.

No formal proposals have been exchanged with AMC, said the people, who asked not to be identified discussing a private matter. The situation remains fluid and plans could change, depending on negotiations and market conditions, the people said. This includes the impact of the coronavirus, with ticket sales suffering because state and local officials are urging moviegoers to stay home.

Other Options

A representative for Leawood, Kansas-based AMC declined to comment. AMC said in a filing Tuesday that cash could run out by the end of this year or early next year if attendance doesn’t pick up, and it’s exploring actions to boost liquidity that include asset sales, renegotiating leases, joint ventures and debt or equity financing. There’s significant risk that its efforts will fall short or fail, AMC warned.

Lenders are getting advice from lawyers at Gibson Dunn & Crutcher and bankers at Greenhill & Co., Bloomberg previously reported.

Cinema chains are facing a chicken-and-egg problem with no near-term solution: As local capacity restrictions and audience skittishness keep U.S. theaters largely empty, studios are delaying most of their major film releases into 2021 and beyond, which gives consumers still less reason to buy tickets.

AMC’s attendance since the resumption of business in the U.S. is down about 85% from the same period a year ago, the company said.

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