AMC Theatres financially struggles to reopen: RPT

AMC Theaters, reported in a financial file, that the company has “substantial doubt” it will stay in business. Yahoo Finance’s On the Move panel share the details.

Video Transcript

ADAM SHAPIRO: But let's turn to something that's going to hit movie theaters and those who love movies, AMC warning it is in big trouble. Ines Ferre, they're warning they could lose between 2.1 billion to 2.4 billion. How do you come back if no one's going to the movies?

INES FERRE: And that's their big problem. AMC saying that it is generating no revenue from movies, from concessions, which substantially-- which represent substantially all of its revenue and cash flow from operations. And also the company saying, in an 8-K filing, some very sobering remarks, saying, we cannot predict when or if our business will return to normal levels.

One of the problems that movie theaters have is that they have to operate at high capacity because if they operate at 25% to 30% capacity, it just is an economical for them. The other problem, of course, is because of COVID-19, all of these movies have been pushed out. You do have some that are supposed to come out at the end of the summer. But look, you have to have Los Angeles and New York, the high density areas opening up for studios to want to open up those movies in theaters.

ADAM SHAPIRO: Brian, I know you follow corporate debt quite closely. AMC, do we have an idea of just how big their debt picture is?

BRIAN CHEUNG: Well, as Ines was saying, if you have no revenue, that's going to be a massive issue if you're trying to do some fund raising to bridge this period if you still can't open your movie theaters. So I'm looking at the data, I mean, the last time that AMC was able to issue any debt was on April 15. It was a $1 billion offering for a maturity date of five years from now at a crazy coupon rate, I mean, 11%. When you consider that they have a CCC rating, that's junk debt. Of course they're going to have to offer some nice payout on that.

But look, the funding issues for these theater operators is no-- is definitely going to be a question for the future when you consider that there are a number of others in this ecosystem like Redding International. This is a cinema and real estate company that actually kind of leases out the theater spaces. They say they might have to tap the Federal Reserve's Main Street Lending Program to get a cheap loan to bridge themselves through this period. So this whole industry is just really looking for any sort of funding right now in order to keep themselves alive.